National Bank cuts 600 jobs in digital shift
Plans to hire 500 tech staff, offer early retirements
National Bank of Canada is the latest bank to shake up its workforce in the face of industry-wide digital disruption, with plans to cut 600 jobs and hire 500 new technology-focused employees.
Canada’s sixth-largest bank announced Thursday that it will eliminate about 600 jobs, or 3 per cent of its nearly 22,000 employees, and offer early retirements or reassignments to another 300.
“It’s mainly targeted at jobs that won’t fit in the new environment,” said National Bank spokesperson Claude Breton.
Most of Canada’s “Big Six” banks have been cutting jobs over the past year in more traditional areas of the business, as technological advancements allow them to digitize certain parts of their operations.
Major financial institutions will likely continue to cut for a number of years as they change focus to embrace the digital economy, said Pauline Shum-Nolan, director of York University’s Schulich School of Business Master of Finance program.
“Costs will be lower when you can engage more technology,” she said.
“But also from the demand side, banking customers are demanding more digital engagement and, going forward, that demand will only increase with the millennials who grew up with technology.”
National Bank’s staffing changes are part of a transformation plan aimed at becoming more efficient and better serving customers’ evolving needs — as the entire banking sector tries to make up for slowing revenue growth and stay ahead of leaner, tech-savvy competitors.
“The shift to a digital economy offers tangible growth opportunities for National Bank, but requires us to remain agile and efficient in fully meeting client expectations,” president and CEO Louis Vachon said Thursday.
“Our clients’ habits are changing, and our services need to change with them.”
Canadians are now more likely to use online banking weekly than go into a branch, according to a Yahoo survey released earlier this year. The Canadian Bankers’ Association has found that 55 per cent of Canadians now do all of their banking online.
Banks that don’t adapt to the digital disruption could see profits decline by as much as 35 per cent, according to a 2015 report by McKinsey & Co.
They are responding by beefing up their mobile and other digital offerings while also trying to make the branch experience more specialized.
National Bank plans to cut the average size of its branches in half from about 2,000 square feet currently, Breton said.
“There’s a lot of traffic now that is driven by the digital front, so less traffic into the branches, so we are adjusting to that.”
The focus on digital will also help the bank expand its presence in Western Canada without the need to open physical branches, which can take a decade to become profitable.
About 70 per cent of the cuts will come from its home province of Quebec — largely at its Montreal headquarters and at branches. The rest will be broad-based across the country, though with just 2,000 employees in Ontario, the impact in this province should be limited.
National Bank’s cuts come about a year after it announced it would lay off 400 employees. It will book a $128-million after-tax restructuring charge in the fourth quarter, but also expects to realize $120 million in pretax annual cost savings.
Since the fourth quarter of 2014, Canada’s banks have booked $2 billion in restructuring charges, said TD Securities analyst Mario Mendonca.
Most recently, the Bank of Montreal said in May it will cut 1,850 jobs, or 4 per cent of its workforce, while the Bank of Nova Scotia said the same month it has cut 650 jobs in its Canadian banking and wealth divisions and expects to close 50 branches in the next two years.
TD Bank cut nearly 1,600 positions and booked $686 million in restructuring charges last year, while Royal Bank cut 1,200 employees. CIBC has also booked restructuring charges but the number of job cuts is unknown.
Banks employed 280,115 Canadians last year — mostly in Ontario.