If you’re like most people, you do not like the financial industry, perhaps because they crashed the national economy nearly a decade ago and the vast majority of the recovery went to the already rich. Well, some news from the Nordic region: Our new robot overlords might wipe the billion-pound grin off the industry’s face in the coming years.
Nordea Bank AB CEO Casper von Koskull, who is already trimming some 6,000 jobs as part of a machine-driven approach to banking, thinks that computers and algorithms can severely thin the ranks of banking management.
“You need to ask the question, what value is the human adding, and how does that affect pay?” Koskull told Bloomberg in an interview on Tuesday, rattling off sectors including personal, investment, and corporate banking, liquidity management, and foreign exchange ripe for a haircut.
“The ones who are mostly hit are middle to higher-level management, because those layers aren’t needed, or shouldn’t be,” he added. “... A lot of society would say that we are still, even, paid too much.”
Studies have repeatedly suggested that Koskull is right and that a huge chunk of jobs in banking can be automated. In 2016, a Citigroup report warned that from 2015 to 2025, about 30 per cent of the industry could be wiped out, largely due to trends in retail banking. Another report by McKinsey earlier this year suggested up to a third of banking work can be automated, though it predicted less dire job cuts. The long-term picture at investment funds and other firms may ultimately be even worse, with everyone from portfolio managers, traders and analysts potentially on the chopping block, per an October review in Bloomberg.
Lest the idea of sinking the banks appeal to you too much, keep in mind that ditching employees is not the same as ditching political and economic influence. The trend towards automation these days has generally concentrated more wealth and power in fewer hands, which is not really so good either. [Bloomberg]