U.S. banks are poised to drop 200,000 jobs, or 10 percent of employees, over the next decade as they maneuver to increase revenue in the face of changing customer behavior, according to an analyst at bank.
“This is the largest reduction in U.S. bank headcount in history,” Wells Fargo analyst Mike Mayo told the Financial Times. If his estimate is released, this year will mark a growth point for US banking sector, where the number of jobs has remained almost flat at 2m in the last decade.
The most risky jobs are those in branches and call centers as banks cut their expanding networks to match the new realities of post-pandemic banking, the report found. Mayo. That’s in line with Department of Labor statistics that predict a 15 percent decline in bank teller jobs over the next ten years.
Historically, lay-offs, especially lower-paying jobs, have been a controversial issue for the banking industry, often held by progressive politicians as an example of the wealthy. industry that prioritizes people’s income.
But the threat of technology companies and non -bank lenders moving away from the payments and lending business, which is traditionally dominated by banks, has increased even more in the past year, prompting job cuts, according to May.
“Banks need to be more productive to stay relevant. And that means more computers and fewer people,” he said.
Most of the reductions could be achieved by attracting the next 10 years rather than cuts, which would reduce the risk of a backlash, according to May.
New research, first reported by the FT, begins with upsetting jobs data showing that the U.S. economy added 266,000 jobs last month, severely missing estimates of 1m. Elements of structural unemployment such as accelerated automation that occur during a pandemic can be much stronger than the expected headwinds to job recovery. economic officials said following the report.
Pandemic activity pushed the headcount up nearly 2 percent last year as banks hired staff to meet the sudden demand for labor-intensive loans and government-backed small business loans. But that trend is likely to shift quickly as lenders focus on efficiency to more effectively compete with technology companies that are increasing their share of the business during a health crisis.
Increased competition from unregulated companies such as PayPal and Amazon to enter financial services is one of the main concerns of JPMorgan Chase’s chief executive. Jamie Dimon outlined in his annual letter to shareholders last month.
It was estimated in May that banks now represent only one-third of the total financing market.
“Dissolution is accelerating and that’s playing hard on some fintech and other tech providers,” Mayo said.
Many of the bank branches that were closed during the pandemic are likely to remain that way, and even those that remain open are likely to be more lenient on staff because the branches have become more focused on providing advice than speeding up transactions. A large amount of back office duties can also be automated but those numbers are even harder to quantify, according to the report.
Mayo said his team 20 years ago doubled in size and was responsible for half the majority. Making a little more of a new approach across the industry.
“If I were giving advice to my kids, I’d say you probably don’t want to go into the financial industry,” Mayo said, adding that technology and customer or client -facing duties are probably the only areas that see growth. . “It’s probably a small industry.”