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According to a banking analyst, US banks will eliminate 200,000 jobs, or 10% of employees, over the next decade as they maneuver to increase profitability in the face of changing customer behavior.
“This will be the biggest downturn in the history of U.S. banks,” Wells Fargo analyst Mike Mayo told the Financial Times. If his forecast is met, this year would mark a turning point for the American banking sector, where the number of jobs has remained flat at about 2 million over the last decade.
The most risky jobs are those in offices and call centers, as banks can use their extensive networks to adapt to the new realities of post-pandemic banking, according to the Mayo report. This is consistent with Labor Department statistics that predict a 15% decline in bank teller jobs over the next decade.
Historically, layoffs, especially for lower-paying jobs, have been a controversial topic for the banking industry, which is often supported by progressive politicians as an example of a wealthy industry that prioritizes profits over people. .
But the threat from technology companies and non-bank lenders to eliminate the business from payments and loans, which have traditionally been dominated by banks, has intensified over the past year, necessitating job cuts. said Mayo.
“Banks need to be more productive to remain relevant. And that means more computers and fewer people, ”he said.
Most reductions can be achieved through wear and tear in the next 10 years rather than cuts, reducing the risk of backlash, Mayo said.
The new research, first published by FT, comes down to disappointing job data that showed the U.S. economy only added 266,000 jobs last month, abruptly missing estimates of 1 million. The structural elements of unemployment, such as the accelerated automation that took place during the pandemic, could be a wind force foreseen for the recovery of labor, said economic officials after the report.
Pandemic activity increased the number of workers by about 2% last year as banks hired staff to meet the sudden demand for mortgages that require a lot of labor and small loans backed by the government . But this trend is likely to be reversed in the short term as lenders focus on efficiency to compete more effectively with technology companies that increased their business share during the healthcare crisis.
Increased competition from unregulated companies such as PayPal and Amazon entering financial services was a major concern for JPMorgan Chase CEO Jamie Dimon mentioned in its annual letter to shareholders last month.
Mayo estimates that banks currently account for only a third of the global financing market.
“Digitization accelerated and this played into the strength of some fintech technology providers and others,” Mayo said.
Many of the bank branches that closed during the pandemic are likely to remain so, and even those that remain open have more staff as branches focus more on providing advice than on facilitating transactions. A lot of back-office roles also need to be automated, but those numbers are harder to quantify, according to the report.
Mayo said his team 20 years ago was twice as big and responsible for half. Doing more with less was the new industry-wide standard.
“If I were giving advice to my kids, I would say you probably don’t want to get into the financial industry,” Mayo said, adding that technology and client or client roles are probably the only areas that will grow. “It’s likely to be a shrinking industry.”
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