RoboTeller How tech will decimate bank jobs
Robots will replace more than 200,000 Americans in a decade
● US banks will cut more than 200,000 jobs in the next decade as robots and other technologies bring about the “greatest transfer from labour to capital” the industry has seen, a report by analysts at Wells Fargo claims.
Cuts of this magnitude would represent more than 10% of total bank jobs and clear the way for a “golden age of banking efficiency”, according to Mike Mayo, a veteran Wall Street analyst who led the report.
“It’s been a rocky 25-year marriage for banking and technology but it’s finally getting on course,” he said.
Individual banks have predicted that machines could replace thousands of jobs, most notably Citigroup CEO Mike Corbat, who said “tens of thousands” of call-centre workers could be replaced, and former Deutsche Bank boss John Cryan, who warned in 2017 that as many as half the bank’s 97,000strong workforce could go.
Wells Fargo’s team of financial services and technology analysts looked at the impact of technology across the US banking industry.
In their 225-page report, they detailed how artificial intelligence could reduce mortgage processing costs by 10% to 20%, while big data would allow “more surgical marketing” and cloud computing could yield significant savings.
“Banks spend more on tech than any other industry, $150bn [R2.27-trillion] a year, and, therefore, better get their money’s worth,” the analysts wrote.
The job cuts would be felt most heavily in back offices, branches and call centres where staff numbers could fall by between 20% and 30%, Wells Fargo said.
The biggest savings will be at larger banks since “technology is a game changer for scale”, according to Mayo.
The job cuts would reverse a largely unbroken trend of net job creation in the US banking industry. Data from the Federal Deposit Insurance Corporation (FDIC) shows that the industry’s collective headcount has shrunk only 16 times since 1935 and never by more than 55,000 in a single year.
“They don’t have a choice,” said Mayo on whether banks would be prepared to cut so many employees. “The banking industry is a slower-growing industry than it’s been in the past … Half of the banks’ costs are compensation, there aren’t many other levers to use.”
The job cuts would be felt most heavily in back offices, branches and call centres