Investment banking leaders envision a future whereby machines will take over tasks that are considered lower-value.
In fact, an investment banking executive recently revealed that Citi group’s investment bank looks forward to cutting down half of its 20,000 operations and technology staff in the coming five years as machines continue to replace humans at a rapid pace.
The prediction made by Jamie Forese, the chief executive offer of Citi’s institutional client’s group and president of the bank, was the most blatant one amongst investment banking executives in a series of Financial Times interviews held to commemorate the 10th anniversary since the financial crisis.
According to him, the operational positions, which amount to nearly two-fifths of Citi ’s investment banking employees were most suitable for machine processing.
Aside from Jamie Foresee ’s comments, other executives of large banking firms also made similar comments.
In fact, Richard Gnodde, the chief executive of Goldman Sachs International, who is the bank’s most senior person outside the United States, said that he sees no reason why automation in the banking sector should not keep growing.
He also emphasized his statement by saying that there are numerous functions nowadays that technology has taken over and does not see any reason why that progress should be cut short in the near future.
Samir Assaf, HSBC’s head of global markets and banking, claimed that the journey regarding the replacement of investment bank personnel with technology would not go much further.
According to him, there may be another 5-10% progress in the situation between now and in five years’ time.
The comments made by various banking executives interviewed by the Financial Times echo the stark warning regarding automation that was issued by the former chief executive officer of Deutsche Bank, John Cryan, back in 2017.
During a conference held in Frankfurt, Germany last September, Deutsche Bank ’s former CEO warned that a large number of employees at the bank would eventually be phased out by robots among other forms of emerging technologies.
John Cryan made this statement citing Deutsche Bank’s increasing adoption of a revolutionary spirit.
Cryan also pointed out that although banks currently have people acting like robots, soon banking institutions will have robots behaving like humans.
Even though he recommended the finding of new techniques to recruit people, he concluded by saying banks would not need as many employees as they have today.
According to FT’s research, if the scenario is replicated across the entire banking industry, the potential job losses would serve as a representation of a steeper rate of job cuts compared to 2007-2017, when nearly 60,000 jobs were done away with, especially from eight of the top 10 investment banks in the world.
Two of these investment banks were not included in the research.
They include the Bank of America due to its merger with Merrill Lynch in 2008, which could make the comparisons of the pre-financial crisis futile as well as Citi due to lack of available data.
Popular belief has it that technological advances in the banking industry would only affect straightforward jobs like data entry.
However, the 2016 report derived from the World Economic Forum showed that automation would cause a net loss of more than 5 million jobs in 15 top emerging economies and developed nations by 2020.