Two converging trends have enabled forms of AI that can effectively mimic or replace human labor. On the one hand, specialized hardware has increased processing power, making it possible for AI systems to generate outputs in real time. At the same time, the amount of data available to feed those systems has skyrocketed, thanks to search histories, online photos, and more. Combine those two capabilities, and software engineers have the tools to create virtual assistants like Alexa, and automated filing services like Google Photos. So far, AI is best suited to discrete, repeatable tasks.

The idea of artificial tends to strike fear in the hearts of workers who suspect they'll be replaced by robots. The reality is more nuanced. There is no question some jobs will be lost. But others will be created, and still others will morph into something different -- bot designer, bot supervisor, soother of the most irate customers. In some cases, AI will just take on extra work nobody wants to do.

According to a new report from Autonomous Research, AI has potential to reduce front, middle and back office costs by $199 billion by 2030. AI could save firms 60% in front-office costs by targeting financial advisers and the infrastructures that support them, cutting an estimated $125 billion across the industry. Another $32 billion could be saved by handing middle-office costs like compliance and trading to computers, while another $42 billion could be cut from portfolio manager compensation and associated research costs. Most savings will be realized by the largest financial institutions. Independent firms could find themselves threatened, said Lex Sokolin, Autonomous' global director of fintech strategy.

A study released in December found that 82% of U.S. commercial banks plan to increase fintech investment over the next three years; 86% of bank senior managers surveyed said they intend to boost fintech funding imminently. The research was commissioned by the global fintech provider Fraedom. The research firm Statista predicts U.S. fintech companies will receive $4.7 billion from all types of investors in 2018. Some of the areas of fintech likely to draw investment are the buzzwords of 2017. "We're seeing different ways of enabling funding or lending and measuring creditworthiness," said Jennifer Byrne at Quesnay, a company that connects fintechs with traditional firms.

On Jan. 13, banks in the European Union will become the leaders of the so-called open banking movement, allowing access to customer account data for any third-party service provider their customers approve via a dedicated communication interface. The move is the fruit of the second Payment Services Directive (PSD2), which the European Commission says will "facilitate innovation, competition and efficiency," give consumers more and better choice in the EU retail payment market, and introduce higher security standards for online payments. In the U.S., however, open banking is largely ad hoc and more of a workaround. A few large banks, such as Wells Fargo and JPMorgan Chase, have made bilateral agreements with data aggregators and accounting software providers. The rest have mostly opted out.

"The holy grail of a chatbot or virtual assistant is to help you adjust your behavior, telling you when to save more or spend in order to reach certain goals," said Lex Sokolin, global director of fintech research for Autonomous Research. Could UBS clients soon be serviced by voice-controlled AI? Maybe not yet, but a new pilot program between the bank and Amazon's Alexa service is testing the frontiers of both science fiction and wealth management. UBS' partnership with Amazon will enable clients and non-clients of the bank to get answers to financial and economic questions, ranging from what is inflation to how the U.S. economy is faring. It's the latest example of how wealth management firms are experimenting with new technologies such as data analytics and artificial intelligence to expand or reinvent the business.