Technology makes thousands of front- and back-office bank jobs extinct

Bank employee numbers in all parts of the finance sector are falling by the thousand as modern IT automates previously manual processes

Bank employee numbers are falling by the thousand, as modern IT automates previously manual processes.

This week Dutch bank ING announced almost 3,000 job cuts in its IT department, back office and callcentres. 

The bank said it is moving to simplified IT systems and automation, at a cost of €200m for two years from 2015. It expects to save €270m per year from 2018. It is cutting 1,700 full-time employees and reducing the number of contractors it employs by 1,075.

The bank said the cuts came as the bank was modernising to meet customer demand. It said customers are banking “the way they want, when they want and in a consistent, reliable, clear and easy way". 

"In this environment we need to continuously improve our service. We are creating a consistent customer experience by integrating our service channels in the Netherlands and by making a substantial investment to simplify and upgrade our IT systems,” said ING CEO Ralph Hamers.

“Unfortunately, the more efficient way of working will impact many of our employees.”

Digitisation strategies cut jobs

Last month Lloyds Banking Group cut thousands of jobs as part of a digitisation strategy to automate manual tasks. The bank group is investing £1bn in digital technologies over the next three years – in digital products and customer service – and will invest £1.6bn in increasing automation and streamlining processes.

Lloyds Banking Group has already made thousands of job cuts as a result of the part state-owned bank launching its Simplification Programme under the guidance of Mark Fisher in 2011. Ongoing simplification processes could lead to further job cuts in the future.

Technologies such as automation, mobile, online banking and video conferencing are replacing people in financial services.

In November 2013 Barclays bank announced plans to cut 1,700 frontline jobs across the UK.

The cuts are part of a strategy to reduce the number of Barclays branches as more customers use technology to do their banking. Barclays said technology and automating services was the reason for the job cuts.

And it is not just retail banks. Goldman Sachs recently invested in financial analytics startup Kensho as part of a $15m funding round. The bank is planning to implement the firm's analytics platform. The platform replaces the labour-intensive analytics tasks through automation.

Recession, consolidation and competition

Since the financial crash that began with the collapse of Lehman Brothers in 2008, hundreds of thousands of job in global banking have been cut, including those of a significant number of IT professionals. This was largely due to substantial cost-cutting exercises and the industry consolidating with failures, mergers and acquisitions.

The emergence of new competitors in the banking sector, in the form of tech-savvy businesses that have harnessed modern IT as a differentiator – rather than seeing it as a cost – are forcing traditional players to change. Besides the new competition, customers want better digital services and the regulators are demanding improved IT. Banks are feeling the pressure from a number of angles.

One source said the large established banks are in trouble. “The dinosaurs know who they are and they are entering the final chapter.

“The future lies with a large number of smaller IT firms that provide specific financial services, not the big old banks that are trying to short-change their IT and place it in lowest cost locations. Sadly the old banks see IT as a cost to be minimised, whereas the emerging providers see IT as both core to their product and fundamental to what they are.”

These new banks will be able to pick up experienced IT professionals deemed surplus by the big banks but, with their modern IT infrastructure, those jobs will be different and far fewer.

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