Editor's note: AI's penetration into the financial industry, personal loans, SME loans, mobile payments, and wealth management, etc., will be gradually automated. Who will these "automation" replace?
Citibank's report described this issue.
It is not easy to become a technology-driven company
Goldman Sachs CEO Lloyd Blankfein said “We are a technology company†because their company has more than 9,000 technicians, which is almost equal to the total number of Facebook employees. Not only is Goldman Sachs doing so, many bank managements are aware of the importance of technology and have made significant investments in IT. About 10 years ago, the chairman of the Bank of Sweden told analysts and media that Swedish bank is an IT. the company.
There is no doubt that banks need to develop IT technology and use automation and digitization to increase efficiency. Therefore, the increase in technicians and input and the reduction of non-technical positions are imperative, but in the short term, this reduction is not It will be too obvious, but the investment in IT technology still needs to increase, so the bank's operating pressure during the transition period is not small.
According to statistics, in the year of 2015, the investment of IT banks in the world is 200 billion US dollars (about 10 times the total amount of VCs flowing to FinTech). By 2017, this figure is expected to be 215 billion, and IT investment accounts for the total number of banks. 10-15% of expenditure.
For most banks, the big problem they currently face is the lack of experience in dealing with large IT systems. Many IT inputs are the operation and maintenance of existing information systems. Only about $50 billion is spent on new technologies and equipment.
The bank used to maintain the cost distribution of the existing information system. From the chart, the retail and trading services accounted for the largest proportion. Due to the banking industry's business in the past, the first generation of information systems was mainly focused on the construction of transaction services.
The emerging FinTech companies are more aggressive in adopting new technologies and they have no such historical burden on the banks.
The report said that in the future, the bank will mainly rely on consulting and consulting services, and the transaction business will gradually be weakened. The investment returns of business outlets are declining, and the corresponding labor costs are gradually rising. The labor cost accounts for 65% of the bank's retail business, and most of this part of the human work can be automated.
At present, the number of bank employees is already about 12% to 13% lower than the peak period. In the decade from 2015 to 2015, the banking industry will usher in about 30% of layoffs. Greece, Ireland and Denmark have suffered more severe financial conditions. Their number of full-time banking practitioners is declining at a rate of 3% to 5% per year, far higher than the industry average, with low profit margins and continuous introduction of automation technology. Further exacerbated this decline.
Comparing the number of bank practitioners compared to the peak period and the expected situation in 2025
The banking retail business is moving towards automation and digitization. We are at a turning point of drastic changes. As banks shrink their business outlets, employees engaged in trading operations will naturally be compressed. In the United States, the number of checkers' data fell by 15% from the peak in 2007, and in the long-term, 65% of the bank's retail business can be automated.
Raising the productivity of employees will be a core element of bank competition. Our sample shows that average employee productivity (measured by how many customers a person serves) is directly proportional to the profitability of the bank. Banking employees in Northern Europe, Australia and Belgium are more productive than Spain and Italy. They are also more motivated to promote automation.
The situation in developed and developing countries is different. U.S. banking employees decreased by 13% compared to their peak period. Major downsizing took place during the period 2006-2009. The number has remained stable since then; the number of bank employees in Europe was the highest in 2008, and the subsequent six-year calendar has been experiencing Slow decline; while Asia and Latin America, with the expansion of the banking industry, the number of bank workers is still growing.
Lei Fengnet (searching "Lei Feng Net" public concern) reviewed China Merchants Bank's financial report for the past two years. As the report said, the "payable employee compensation" column is increasing every quarter, except for the absolute amount. The proportion in total expenditure is also rising. This should be the result of China Merchants Bank still expanding its business.
The “increase in staff†brought by informatization is not as serious as we expected
Citibank's report cited data from nearly a decade. In fact, the economic crisis in 2008 has affected many industries, and the financial industry bears the brunt of it. Therefore, if there is no automation or financial technology behind it, bank downsizing will certainly happen.
More and more transactions are being automated or completed on mobile phones, so bank practitioners will also face a career redistribution process, and transaction-driven practitioners will turn to consulting and consultant-related work.
The popularity of each wave of technology will bring about structural unemployment (but it will also create new occupations). This time is no exception. There is no good answer to this problem.