Bank analysts say the U.S. banks might end up cutting as many as 200,000 jobs in the next decade as consumer banking behavior undergoes shifts, a report from Financial Times says.
Wells Fargo analyst Mike Mayo said it could be “the biggest reduction in U.S. bank headcount in history.”
In Mayo’s estimation, jobs at places like branch offices and call centers are likely to be the first to the chopping block.
That’s because banks have been working around the new reality of banking, with the pandemic having coincided with the arrival of new banking services from fresh competitors like Amazon and PayPal threatening the hegemony of traditional banks. Mayo says regular banks likely only make up around a third of the current financing market, with digitization having shifted the landscape.
The FT report notes that many of the banks that closed during the pandemic will likely stay closed.
And among those that are open, the staff will likely see some slimming down, with banks pivoting to a model more focused on providing advice than facilitating transactions.
Several back office roles are also more likely to be automated. Mayo said the number of reductions could be tempered by attrition over the next 10 years. That could cut down on the risk of a backlash.
J.P. Morgan Chase’s Jamie Dimon recently expounded on the challenges banks are facing from the newer FinTechs and competition from nonbanks. Dimon said those facilities do not have the same capital rules and regulations.
He said the intrusion of Big Tech firms would only become more pronounced in the future as reliance on the cloud and artificial intelligence increases, too.
According to PYMNTS, he also said the economy was likely to be seeing good times ahead due to a series of factors including excess savings and the stimulus payments sent out earlier in the year.
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