Banking on automation
30% of jobs said at risk
Vikram Pandit, the former chief executive of Citigroup who guided the bank through the financial crisis, said developments in technology could result in some 30 percent of banking jobs disappearing in the next five years.
Artificial intelligence and robotics reduce the need for staff in roles such as back-office functions, Pandit, 60, said last week. He’s now chief executive officer of Orogen Group, an investment firm that he co-founded last year.
“Everything that happens with artificial intelligence, robotics and natural language — all of that is going to make processes easier,” said Pandit, who was Citigroup’s CEO from 2007 to 2012. “It’s going to change the back office.”
Wall Street’s biggest firms are using technologies including machine learning and cloud computing to automate their operations, forcing many employees to adapt or find new positions. Bank of America Chief Operating Officer Tom Montag said in June the firm will keep cutting costs by finding more ways technology can replace people.
While Pandit’s forecast for job losses is in step with one made by Citigroup last year, his timeline is more aggressive. In a March 2016 report, the lender estimated a 30 percent reduction between 2015 and 2025, mainly due to automation in retail banking. That would see full-time jobs drop by 770,000 in the US and by about 1 million in Europe, Citigroup said.
JPMorgan CEO Jamie Dimon cautioned in June against overreacting to the impact of technology on jobs. While the bank is using technology to reduce costs, that helps create other opportunities, Dimon said in an interview published on LinkedIn. He predicted that employee numbers at his firm will continue to rise — as it hires more technology workers.
The banking industry is becoming “enormously competitive,” Pandit said, adding that he foresees the emergence of “specialist providers” as well as consolidation in the industry.
“I see a banking world going from large financial institutions to one that’s a little bit more decentralized,” he said.
Since leaving the firm, Pandit has invested in non-bank financial startups such as studentloan venture CommonBond and home equity finance firm Point Digital Finance. He formed New York-based Orogen with investment firm Atairos Group to acquire stakes in mature financial services companies.