U.S. banks could cut 200,000 jobs in the next decade, the chief analyst says

According to a banking analyst, U.S. banks will lay off 200,000 jobs or 10 percent of their employees over the next decade as they maneuver to increase profitability in the face of changing customer behavior.

“This will be the largest reduction in the number of U.S. banks in history,” Wells Fargo analyst Mike Mayok told the Financial Times. If it meets expectations, it would mark a turning point this year US banking sector, where the number of jobs has been roughly flat at 2m in the last decade.

The highest-risk jobs are in branches and call centers, as banks cut a wide network to match the new realities of post-pandemic banks, the Mayo report found. That’s in line with Department of Labor statistics that predict a 15 percent decline in bank teller jobs over the next decade.

Historically, layoffs, especially in lower-paying jobs, have been a contentious issue for the banking industry, as progressive politicians often make profits as an example of a wealthy industry that prioritizes profits over people.

But the payment and lending business of technology companies and non-bank lenders, which have traditionally been dominated by banks, has grown in the past year, and job cuts are necessary, Mayo said.

“Banks need to be more productive to stay relevant. And that means more computers and fewer people, ”he said.

Most of the reductions can be achieved through wear and tear over the next 10 years instead of making cuts, reducing the risk of reaction, Mayo said.

The new study reported by FT comes in the wake of data on the depressing jobs that have shown the U.S. economy has only shown 266,000 jobs in the last month, with a 1m estimate that is significantly missing. Structural elements of unemployment such as the rapid automation that occurred during the pandemic may be stronger than projected headwinds to recover labor. economic officials said after the report.

Pandemic activity rose by about 2 percent last year as banks hired staff to meet the sudden demand for labor-intensive mortgages and government-backed small business loans. But it is likely that this trend will be reversed in the short term, as lenders focus their efficiency on competing more effectively with technology companies that increased their business share in the health crisis.

If I were to give my kids advice, I would probably say that you don’t want to get into the financial industry

Increasing the competitiveness of unregulated companies, such as access to financial services such as PayPal and Amazon, was one of the main concerns of JPMorgan Chase CEO. Jamie Dimon it is explained in an annual letter to shareholders last month.

Mayo estimates that banks currently represent only a third of the overall funding market.

“Digitization accelerated, which played with the power of fintech and other technology providers,” Mayo said.

Many bank branches that were closed during the pandemic are likely to remain so, and those that remain open will also have lighter employees, as the branches are focused on providing more advice than facilitating transactions. Many office tasks also need to be automated, but those numbers are harder to quantify, the report says.

Mayo said 20 years ago his team was twice as big and responsible for half of it. Doing more with less was the new industry-wide rule.

“If I were to give advice to my children, I would probably say that they don’t want to get into the financial industry,” Mayo said, adding that technology and customer or client-facing roles are the only areas that will grow. . “It’s likely to be a shrinking industry.”