One in five financial services jobs will be replaced by artificial intelligence (AI) or automation within the next five years, according to the latest KPMG and Harvey Nash report.

The survey of 3,600 IT leaders found that 43 per cent of banks expect a fifth or more of their workforce to be replaced by AI or automation by 2024.

In the insurance sector, nearly half of organisations (46 per cent) believe the same. In comparison, the global average across industries estimates that a third of jobs will succumb to technological disruption.

However, despite the gloomy outlook for current roles fulfilled by humans in the financial services sector, the vast majority of respondents in banking (70.5 per cent) and insurance (69.5 per cent) believe new jobs will appear that will compensate for these losses.

The survey found that both banks and insurers are stepping up their investment in pilot schemes or implementations for certain kinds of robotics. The top three skills shortages for banking are analytics (47 per cent), cyber security (49 per cent), DevOps (40 per cent) and AI (38 per cent).

Two thirds of respondents in the banking and insurance sectors said their lack of skilled staff in these areas were preventing them from keeping up with the pace of change.

Albert Ellis, chief executive of recruitment and IT services provider Harvey Nash, stated: “Sectors such as insurance are investing heavily in automation, with over half of IT leaders in this sector reporting that they are either piloting or implementing AI/machine learning.

“The mortgage industry will also increasingly be affected, where the assessment of applications including income and outgoings analysis and house valuations will all potentially be performed, almost instantly, by technology feeding on big data.”

However, he added that while previous forecasts of the impact of AI and automation suggest that it would create a highly visible ‘big bang’, this research illustrates that most automation is going to happen incrementally, task by task.

As a result, Ellis noted that “jobs will change slowly with mini-waves of automation making larger steps from time to time”.

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