In the next 10 years, as robots and other tech bring about the “greatest transfer from labour to capital” the industry has witnessed, per a report by Wells Fargo analysts, U.S. banks will slash over 200,000 jobs. Veteran Wall Street Analyst Mike Mayo noted that cuts of such magnitude would comprise over 10 percent of total bank jobs, and pave the way for a “golden age of banking efficiency,” the Financial Times reported.
Mayo said, according to the outlet, “It’s been a rocky 25-year marriage for banking and technology, but it’s finally getting on course.”
Wells Fargo’s team of analysts in financial services and technology examined technology’s impact throughout the banking industry in the U.S. The 225-page report discussed how artificial intelligence could cut costs for mortgage processing by 10 percent to 20 percent. Cloud computing, on the other hand, could bring in significant savings, while Big Data would enable “more surgical marketing.”
Individual banks have forecasted that machines could take the place of thousands of jobs. Citigroup Chief Executive Mike Corbat, for instance, noted per the report that “tens of thousands” of call center workers could be replaced. John Cryan, former Deutsche Bank boss, warned in 2017 that up to half of the 97,000-strong workforce of the bank could go. Federal Deposit Insurance Corporation (FDIC) data, however, shows that the industry’s overall headcount has shrunk only 16 times as of 1935.
In separate news, U.S. banks had something to cheer about last year: Not one bank went under, putting a spotlight on the banking market’s strength. According to a report in January, citing Calculated Risk, last year was the first time since 2006 that not one U.S. bank failed during the year, and the third time since the FDIC was founded in 1933 that a whole year went by without a bank going under.
The reasons, according to the past report: economic expansion, regulations put in place after the recession that are improving the risk at banks and President Donald Trump’s corporate tax changes.