Co-operative Financial Services (CSF) is making 1,000 people redundant this year as it faces new internet-based competition and invests £250m in the business, including considerable spending on technology.
The company reaffirmed its decision not to offshore any of its customer-facing staff.
"A number of measures will be taken in order to achieve these cost reductions, but job losses are regrettably unavoidable and CFS proposes to reduce its workforce by approximately 1,000 during 2007," said the company.
A company spokesman told Computer Weekly that competition from new players is a factor in the company's need to cut costs. But he said the business needs to invest to ensure its customers have access to the bank via all mediums including the internet.
"We are investing £250m in the business and technology will be a fair chunk of this spending," he added.
The investment plans include a new web offering for general insurance and new technology for CFS financial advisers.