Thanks to fintech advances, banks may reduce staff by 30pc

31 Mar 2016

Banking is undergoing its most disruptive era ever, with every aspect of its traditional business model under attack from outside forces. This is bad news for frontline staff.

Up to 30pc of employee numbers at traditional banks could go over the next decade, with growing automation rendering huge swathes of staff roles outdated.

That’s according to Citi’s report into digital disruption in the banking world, with it claiming a fintech-driven automation ‘tipping point’ is coming in the immediate future.

Saying branches are soon to become about “advisory and consultation” rather than transaction, the loading of fintech investment towards the end-user experience means plenty of lower-end positions are on the ropes.

“We believe that there could be another 30pc reduction in staff during 2015-2025, shifting from the recent 2pc per year decline to 3pc per year, mainly from retail banking automation,” the report reads.

Fintech feeding an Uber moment

It’s worse news for countries like Greece and Ireland, where the financial crises were felt most, with the decline topping out at 5pc per year according to Citi’s estimates.

Fintech investment by financial institutions has risen from $1.8bn at the start of the decade to $19bn now, with 70pc of it focused on the customer experience. Given that this experience used to be ‘in-store’, you can see where the warning signs are.

Calling the impending tipping point “banking’s Uber moment”, Citi claims it will specifically see a huge shift towards mobile banking, with it becoming customers’ primary mode of interaction with their banks.

“Branches will be only one of the distribution channels. They will still play an important, albeit diminishing, role,” reads the report.

Last December, the European research institute BearingPoint found that the vast majority (90pc) of banks’ new digitalisation prioritisation was needed, however, at that point just 17pc felt up to the task.

Citi’s findings show that that low base is poised to skyrocket.

ATM machines image via John Abbate/Shutterstock

Gordon Hunt was a journalist with Silicon Republic