Wells Fargo Predicts That Robots Will Steal 200,000 Banking Jobs Within The Next 10 Years


According to a Wells Fargo research report, robots will eliminate 200,000 jobs in the banking industry within the next 10 years. 

These numbers seem astounding and mind-boggling. However, the robot overhaul has been in motion for some time. While others use the term “robots,” it’s fair to say that this also refers to artificial intelligence, advanced technology and sophisticated software.

Like many business sectors, banks are under siege from a confluence of factors working against them. The current trend of low and negative interest rates is an anathema to their business model. When rates are too low, the banks’ margins are squeezed so tight that it’s hard for them to turn a profit. Lending is the cash-cow division for most banks. When this area is under pressure, it doesn’t bode well for the bottom line.   

Banks are worried about a myriad of other factors, including how the decade-long stock market surge will end—in a mild recession or something far worse. Fears of a possible recession may curtail future business. Trade and tariff wars, nasty politics, Brexit, climate control, FinTech disruptors, low trading volumes, a recent poor slate of controversial IPOs and geopolitical uncertainty and tensions all take their toll. 

Unlike other industries, banks are not weighed down with expensive factories, manufacturing plants or showrooms full of high-priced vehicles. Their biggest expenses are their employees. If banks can replace people with robots and technology, while continuing to do business, profits will soar. To reduce headcount, they have adopted robots, artificial intelligence and technology.

We have already seen the consequences in our own neighborhoods. It went from a bank on every corner filled with tellers and staff to the closures of the very same locations. As customers became more comfortable with online banking, the need for costly real estate and teams of people in branches diminished.

According to the management consulting firm, Boston Consulting Group’s latest report,  advances in robotics and technology allow businesses to perform more complex functions at greater efficiency and ease. Automated workforces have huge benefits for banks. While an employee needs lunch breaks, vacation and sick time, bathroom breaks, insurance and health benefits, robots do not. Technology works all of the time without needing coffee breaks, raises, promotions or a pat on the back. The costs for robotic hardware and software have dramatically decreased by around 40% over the last decade. It is now much cheaper for banks to install and deploy. Technology requires an initial expense to install, some upgrades, repairs and oversight, whereas banks must continue paying employees and provide them with costly benefits. 

At top-tier investment banks, highly paid employees, like stock and bond traders, have already been replaced by technology. Marty Chavez, former global co-head of the securities division of Goldman Sachs, says that all traders will soon need coding skills to succeed on Wall Street. Once upon a time, traders with a stomach for risk—and barely a college degree—could earn a small fortune as a trader. Goldman’s so-called “tech evangelist” preached to make money, capital and risk programmable by combining traditional investment with technologies.

Mike Mayo, a senior analyst at Wells Fargo Securities and author of the report, says that back office, branch, call center and corporate employees will be severely cut. He claims that the robots will bring forth a “golden age of banking efficiency.”  

People who work in technology and client-facing roles, such as sales, client advising and consulting, won’t be hit as hard. Finance professionals with solid skills in data science, machine learning, artificial intelligence, coding, AI platform support engineers, AI architects, senior Python engineers and others who have the requisite skills will survive and thrive. 

According to a new study conducted by economists at the Federal Reserve Bank, automation has “contributed substantially” to reducing the portion of national income that goes to U.S. workers over the past 20 years. In plain English, this means that workers are reluctant to ask for significant pay hikes out of fear that their employer will replace them with automation. This trend will exacerbate the lives of people working on Wall Street. Those who remain will be afraid to ask for raises—out of fear that their jobs will be automated. This explains, in part, why wage growth has been relatively weak despite full employment. 

We tend to think of all bankers as earning a high income—and many do. However, a large portion of those who will lose their jobs are bank tellers, administrative staff, operations clerks and those engaged in relatively menial repetitive tasks who do not earn large salaries. To account for this problem, some say that having access to basic needs should become a right, not a privilege for the non-automated classes. There are growing arguments for companies to be responsible for those replaced. Many are calling for a form of universal basic income to get families through this tough period.

Today, it’s the banks, but this trend will impact almost every business sector and millions of American workers. 



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