It is widely discussed that a whole variety of technologies are on the verge of disrupting the financial sector in the next 2 decades in the same way that manufacturing was revolutionised by automation a generation ago.

The potential of robo-advice and blockchain, in particular, is described in terms of embrace or die by advocates. Most weeks another report comes out claiming that 40-50% of current jobs could be automated over the next 2 decades. Experience of past technology enabled disruption suggests that new jobs will also be created but not requiring the current skill set and not necessarily in the same locations. Rochester and Detroit are contemporary examples of Cities that were dependent on a major industry in each case and have fallen on hard times.

It is therefore worth considering what the impact on the UK might be. Here I will just look at the central forecasts rather than develop a range of scenarios. My purpose here is, rather than focus on old vs new models of banking or insurance say, to explore what actions might be needed to avoid the problems that currently beset the Steel Industry in the UK if these central consensus forecasts are in the right ballpark.

Currently 2.1m people in the UK work in all aspects of finance, representing 12% of GNP and 7% of employment. So, the implication is that 1m of today’s jobs are likely to go over 20 years. Compare that with 4000 at Port Talbot.

That kind of job loss is bound to be accompanied by corporate failure. If the £571m pension deficit at BHS is an issue today, what would be the implication of Pension deficits of the failure of a major financial institution?

The key question, for me, is how many jobs are dependent on the success of Finance? Even with a low multiplier of 2 or 3 times the direct employment, these are truly huge numbers, larger than the scale of impact felt in bulk manufacturing and mining at the end of the 1970s and 1980s.

So, how many new jobs can Fintech create to compensate for the losses envisaged above? Looking at a small number of Fintech start-ups public announcements, their claims suggest that they need around 1 person for every 5 jobs destroyed by their (claimed) superior efficiency. It’s a small sample, so not necessarily realistic but it’s certainly not 1 for 1.

There are other challenges which need to be considered. For instance, one aspect of the digital economy is the growth of dominant players in each “niche”, be it Amazon, Google, Uber or Facebook.

What is it that would stop the rise of a dominant robo-advisor company? Given the high costs and low returns of financial advisors over the last few decades could consumer financial advice be an area where more than 50% of jobs might go? I remember arguments that telephone banking would only ever be a niche and that people wanted branches not the internet.

Now, let’s consider that the central projections are unrealistic. Even at 25% of current jobs, the impact is still potentially enormous. If the 50% is accurate but it will take 40 years to happen that is still in the working life of today’s graduates.

The ageing and complex legacy systems of today’s giants do not help them to be agile against the upstarts of Fintech. No doubt we will see acquisitions and mergers between the old world and the new world preserving some of the brands if only in name.

Now, I am far from downbeat about the potential of Fintech. There are real opportunities as well as the threats I’ve outlined here.

What I would argue is that the need for financial centres to reinvent themselves cannot be done institution by institution alone.

With 700,000 jobs in Finance in London alone there is no room for complacency arguing that “it can’t happen here” risks the Detroit (motors) or Rochester (Kodak) outcomes.

What are the scenarios that can support reinvention at scale for London and the wider UK? What are the skills, infrastructure and policies that are needed? Or, could the Fintech story be simply wrong? I’d like a coherent defence of that proposition if there is one.

The aim of the Long Finance blog is to ask “when would we know our financial system is working”.

There are 2.1 million jobs in the UK alone dependent on getting the role of Fintech right. The component technologies are rapidly maturing and becooming commercially viable. However, much of the discussion is at the tech level, around bitcoin or blockchain rather than at the system level. I think that needs to be addressed and soon.