You can bank on it, IT is here to stay

Pick any conference and any given day and there’ll be a panellist talking fourth industrial revolution and its impact on industry and, in turn, the future competitiveness of the economy. Our bureaucrats are just as well rehearsed on what to say about this age.

It’s for the most part a very big picture, offering little evidence-based research on the effects of this age that seeks to replace both the muscle of man and his thought.

This week’s threatened strike in our banking sector, which would have been the biggest since the 1920s, certainly provides a tangible talking point for conference speakers. While technology opens new growth opportunities for banking across the board, we are in uncharted territory. Especially those employed by the likes of Absa, Standard Bank and Nedbank.

These banks have had their fair share of internal restructuring in recent years, navelgazing that has seen them lose retail market share to the likes of Capitec and FirstRand through its FNB operation. The latter have gained clients on a sales pitch of being digital operators without any of the legacy constraints of their one-time larger rivals.

Under former CEO Maria Ramos, Absa has been either getting married or getting divorced from British lender Barclays. Standard Bank has been letting go of dreams of being an emerging-market giant on both the continent and in places such as Latin America and even Russia. After the highs and lows of the late nineties and early

2000s, Nedbank has had to undergo a complete change in its corporate culture and win black clientele — something I can’t imagine previous management would have been much bothered about.

Today, the focus is firmly on regaining lost ground, and their legacy issues, such as more than 40,000 employees in the case of Absa, are a liability when faced with the competition they now have. It’s a legacy that equates to higher banking costs in a market being sold the virtues of virtually free banking offers. To compete, they are all undergoing some form of restructuring as they seek to introduce automation to reduce operational costs.

What they are finding is rather worrying as they usher in this digital age, with an insider at one of the big banks’ transformational projects saying some processes that used to take three weeks have been shrunk to three minutes and they are finding countless other efficiencies.

Job insecurity, something we’ve long seen as a crisis, is going to get a whole lot worse. And those who have been in jobless lines for some time are about to be joined by a higher-skilled workforce.

I can understand the conundrum the biggest union in the banking sector, Sasbo, has faced in recent years — just how to react to the rapid gain in efficiencies caused by this digital shift. Ironically, the strike failure may have just been a win for it; an opportunity for the union to get a grip on how to confront a technological wave it can’t stop and on which maybe the focus should be on slowing.

A strike would have inadvertently provided some lessons for employers that wouldn’t have strengthened the union’s bargaining position in future. I received an interesting text from my bank assuring me that my services wouldn’t be affected by a strike as long as I used my online applications.

Were the strike to have happened, and clients who bank online weren’t affected, it would only encourage banks to direct even more spend on IT and further reduce reliance on labour.

Even the most socially conscious banking CEO would have found it difficult to bat off such pressure from their biggest shareholders, especially if the strike had proved how resilient the business model has become in this fourth industrial age.

Now banks aren’t in the position of miners, who for decades have warned unions of the threat of mechanisation. The truth is that most South African mining has historically been a labour-intensive game and, for the most part, remains so.

With much shareholder fanfare, Lonmin spent more than a billion dollars mechanising in the early 2000s, only to have to spend a billion more undoing it. It was an expensive process that led to its future struggles and purchase by SibanyeStillwater.

Employees in the banking sector don’t have difficult rock formations to secure their place. What unions and large employers in the sector should be doing is focusing on building a social compact to slow the pace of digital reform, ensuring greater consultation in how staff are upskilled and offering alternative solutions to the inevitable storm.

This is easier said than done in SA, where there’s a trust deficit between corporations, labour and the government.

Unions and employers should [focus] on ... offering alternative solutions