Vikram Pandit, ex-chief executive officer of Citigroup Inc (NYSE:C), believes technological advancements could see as many as 30% of banking jobs vanish over the next five years. Pandit, who is now CEO of The Orogen Group, an investment firm he co-founded, said artificial intelligence and robotics will reduce the need for staff in back-office positions.
According to Pandit, who helmed Citigroup during the financial crisis, “Everything that happens with artificial intelligence, robotics and natural language — all of that is going to make processes easier. It’s going to change the back office.”
Automation may streamline the process and make it more efficient, but it can also make some employees obsolete. This is not lost on Wall Street and its shareholders. Wall Street’s biggest firms use technology, including cloud computing and machine learning, to automate their operations. This forces many disrupted employees to adapt or find new positions.
In June, Tom Montag, Bank of America Corp’s (NYSE:BAC) chief operating officer, said the bank will keep cutting costs, even after reaching its annual spending goal of $53.0 billion by finding more ways for technology to replace people.
“There’s more to do after that,” Montag said. “How much technology can we do that replaces people? How many things do we have that we can use it? How much big data can we use that helps us target better and not waste our time on certain things?”
Pandit’s job forecast for job losses echoes one made by Citigroup last year, but his timeline is much more aggressive. In a March 2016 report, the bank estimated 30% of banking jobs would be lost between 2015 and 2025, mainly because of automation in retail banking. This would result in a loss of 770,000 full-time jobs in the U.S. and one million in Europe.
This is in sharp contrast to what those in banking think technology will do. A survey of more than 3,200 financial professionals expect new technology to improve their careers, for example, by improving workplace performance.
Jamie Dimon, CEO at JPMorgan Chase & Co. (NYSE:JPM), echoes this sentiment and cautioned against overreacting to the impact technology will have on banking jobs. Using technology will help banks reduce their overall costs, but Dimon believes it will also help create other opportunities. He maintains employee numbers at JPMorgan will rise as it hires more technology workers.
Pandit said the banking industry is becoming “enormously competitive,” foreseeing the emergency of “specialist providers,” in addition to consolidation in the industry. This seems to suggest that bank employees will need to either adapt or find new positions.
“Pandit Says 30% of Bank Jobs May Disappear in Next Five Years,” Bloomberg, September 13, 2017.
“BofA Says $53 Billion Expense Target Is Just the Beginning,” Bloomberg, June 14, 2017.
“The Skills Gap Is a Moral and Economic Crisis. Here’s What We’re Doing About It,” LinkedIn, June 26, 2017.