US banks will cut more than 200,000 jobs in the next decade as robots and other technology 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 per cent 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 chief executive 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 97,000-strong 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 per cent, while big data would allow “more surgical marketing” and cloud computing could yield significant savings.
“Banks spend more on tech than any other industry (c$150 billion 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 per cent, Wells Fargo said. The biggest savings will be at larger banks since “technology is a game changer for scale”, according to Mr Mayo.
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