Ro­bots un­leashed to clear out bank staff

THE TECH­NOL­OGY, ALONG WITH AI, TIPPED TO RE­PLACE 33,000 WORK­ERS AT JA­PAN’S MEGA-BANKS

The Nation - - ASIA INNOVATION - YOMI­URI SHIM­BUN

THE ir­re­sistible shift to­wards digi­ti­sa­tion is sweep­ing through Ja­pan’s three mega- banks. Amid a drive to­ward greater ef­fi­ciency and higher prof­its, ar­ti­fi­cial in­tel­li­gence (AI) and robotics tech­nol­ogy are in­creas­ingly re­plac­ing roles typ­i­cally han­dled by thou­sands of bank em­ploy­ees

Mizuho Fi­nan­cial Group is plan­ning to cut 19,000 jobs over the next 10 years or so, as the global com­pet­i­tive en­vi­ron­ment un­der­goes dras­tic changes due to the spread of fi­nan­cial tech­nol­ogy (fin­tech) - tech­nol­ogy used to en­able and sup­port fi­nan­cial ser­vices. Such changes are forc­ing the mega-banks to rapidly em­brace mea­sures to digi­tise their op­er­a­tions.

Fol­low­ing rev­e­la­tions about the Mizuho group’s planned job cuts at the week­end, a Mizuho Bank em­ployee in her 30s said: “At our bank, how to boost slug­gish earn­ings has been an is­sue that needs to be ad­dressed. But I also feel uneasy about cut­ting our work­force.”

All three mega-banks are press­ing ahead with digi­ti­sa­tion, ex­ploit­ing AI, ro­bots and other tech­nolo­gies to stream­line their op­er­a­tions.

They have be­gun im­ple­ment­ing mea­sures that will ul­ti­mately en­able them to re­duce their num­ber of em­ploy­ees.

The Mizuho group has de­vel­oped a robot that can as­sist cus­tomers who visit branches with queries about as­set man­age­ment and other ser­vices.

If the robot is put into prac­ti­cal use, it could re­place em­ploy­ees who cur­rently do this work. By digi­tis­ing these op­er­a­tions and lim­it­ing the num­ber of new hires, the group plans to even­tu­ally cut its work­force to two-thirds of the cur­rent level.

Su­mit­omo Mit­sui Fi­nan­cial Group Inc has in­tro­duced pa­per­less op­er­a­tions at some of its bank branches.

Cus­tomers can use touch­screen sty­luses and elec­tronic sig­na­tures to com­plete pro­ce­dures for trans­fer­ring and de­posit­ing money, rather than fill­ing out pa­per doc­u­ments. The group plans to make these ser­vices avail­able at all branches within three years.

Ro­bots will even be used to com­pile some doc­u­ments at the head of­fice.

The group will re­struc­ture its or­gan­i­sa­tion and aims to ul­ti­mately cut ex­penses by 100 bil­lion yen an­nu­ally in the fu­ture.

Mit­subishi UFJ Fi­nan­cial Group Inc also is adopt­ing AI tech­nol­ogy more widely, and plans to op­er­ate branches in which cus­tomers can use ser­vices with­out the as­sis­tance of bank em­ploy­ees.

The three mega- banks are ex­pected to slash about 33,000 jobs in to­tal.

The in­creas­ing digi­ti­sa­tion of ser­vices that will en­able these re­duc­tions comes amid a se­vere earn­ings en­vi­ron­ment. The im­pact of the Bank of Ja­pan’s neg­a­tive in­ter­est rate pol­icy has dragged lend­ing rates to ex­tremely low lev­els, which has squeezed profit mar­gins and made it dif­fi­cult to boost earn­ings through ex­ist­ing op­er­a­tions such as fi­nanc­ing.

Fur­ther­more, a string of new fin­tech com­pa­nies have en­tered the in­dus­try, in­ten­si­fy­ing com­pe­ti­tion in the fi­nance world. Fin­tech firms, some of which al­low cus­tomers to eas­ily make set­tle­ments, send money and per­form other com­mon fi­nan­cial ser­vices through smart­phones and other de­vices, have be­come wide­spread.

Ja­pan faces an era in which its pop­u­la­tion is shrink­ing. A Bank of Ja­pan Fi­nan­cial Sys­tem Re­port re­leased this month states: “The num­ber of fi­nan­cial in­sti­tu­tions’ em­ploy­ees and the num­ber of branches may be in ex­cess [over­sup­ply] rel­a­tive to de­mand.”

Fi­nan­cial in­sti­tu­tions in Eu­rope and the United States have made a head start on the path to digi­ti­sa­tion. In Fe­bru­ary, the US aca­demic jour­nal MIT Tech­nol­ogy Re­view re­ported that the cash eq­ui­ties trad­ing desk at Gold­man Sachs’ head­quar­ters in the United States em­ployed 600 traders in 2000.

Now, only two traders re­main there. Au­to­mated trad­ing pro­grammes sup­ported by 200 com­puter en­gi­neers do the rest of the work, ac­cord­ing to the mag­a­zine.

Ac­cord­ing to Reuters, Bank of Amer­ica ear­lier this year opened three com­pletely au­to­mated branches that have no em­ploy­ees.

The US bank will open 50 to 60 more au­to­mated branches through next year.

In a re­port on the fi­nan­cial in­dus­try re­leased last spring, US bank­ing gi­ant Cit­i­group said many staff at branches can be re­placed through au­toma­tion. The re­port said: “We be­lieve there could be another 30 per cent re­duc­tion in staff be­tween 2015 and 2025.”

Nana Ot­suki, a chief an­a­lyst at se­cu­rity firm Monex and an ex­pert on the bank­ing in­dus­try, said: “For many banks, stream­lin­ing op­er­a­tions by re­duc­ing em­ploy­ees and branches is an un­avoid­able trend. It’s pos­si­ble such moves will ex­pand in the fu­ture.”

Ja­pan’s mega-banks have be­gun im­ple­ment­ing mea­sures that will ul­ti­mately en­able them to re­duce their num­ber of em­ploy­ees.

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