Banks Are Spending Big Bucks on Automation – Here’s Why

In the next 10 years, 200,000 jobs in the banking industry – which is about 10 percent of total banking jobs – are going to be cut, TechSpot reports.

Similar to other industries, banking is facing job cuts due to automation, from artificial intelligence to developing technology “to replace menial jobs.” One of the main ideas behind banks investing in automation is to make their services cheaper and more efficient. For example, “artificial intelligence could reduce mortgage processing costs by 10 to 20 percent, and cloud solutions as well as telemetry-based marketing could provide more savings on top of that,” TechSpot reports.

Banks are also investing in automated solutions in order to remain competitive. Experts, including Wall Street analysts, say that banks have entered into a race to automate operations, and stay ahead of the pack. The industry “has the highest spending in technology upgrades of all industries,” which is measured to be about $150 billion a year. Common technology investments to beat out competitors include ATMs, chatbots, and software that “assist in the decision-making process,” TechSpot says; this could cut back on human jobs in back offices, call centers, front offices, and branches.

Good for Business, Bad for People

While the banking industry is making strides in cutting costs and boosting business with technology, people are taking a hit: “there’s a workforce the size of a small city that will lose their jobs,” TechSpot says. For example, Citigroup is considering slashing “tens of thousands” of jobs, and Deutsche Bank might be replacing around 48,000 employees with technology.

However, workers in the banking business aren’t the only ones facing the risk of being replaced by technology. The fast-food industry is replacing human employees with robots and digital kiosks; factory workers are replaced with robots. Even lower-income workers, who “perform tasks that are still rather mundane but require some sort of cognitive function,” are replaced by automation.

As a result, decision makers in baking – and other industries – shouldn’t be surprised to see more machines than people at work. Their jobs might be impacted by automation, too.