BoI: By 2025 tech will replace most bank workers

The number of jobs in the banking system fell by 1,300 last year, according to a report published Wednesday by Supervisor of Banks Dr. Hedva Ber.

The Bank of Israel wrote that the number of banking jobs fell by nearly 3,200 in 2015-2017.

“The efficiency ratio in banks is improving. Particularly noticeable is the improvement in medium-sized banks that suffered from inefficiency for many years, such as Israel Discount Bank and First International Bank of Israel,” the report stated.

At the same time, the Bank of Israel notes that the efficiency ratio of banks in Israel is still lower than those in developed countries. In 2017, the ratio was 66.1% in Israel, compared with 62.9% in developed countries (a lower ratio means more efficiency).

At the outset of the report, Ber predicts that the streamlining processes at the banks will continue. “Globally, assessments are that by 2025, technology will replace a large proportion of the banking workforce. Even now there are areas of banking where technology has rendered many employees superfluous,” she writes.

Commenting on the need for banks to adapt themselves to technological changes in the sector and to continually adopt efficiency measures, Ber writes: “… the banks and bankers must continue to act to adjust their business models decisively and with a forward-looking vision… Banks that implement the changes slowly and continue to operate along traditional methods will increase their risk of becoming uncompetitive and irrelevant in the not-too-distant future.”

As part of their economizing measures, banks this year continued to close branches, as they have in recent years. There were 25 fewer branches in the banking system this year – a decline of 2%, and 9% fewer that the peak reached in 2012.

(Globes/TNS)