Higher tech investments in conjunction with large scale headcount cuts could allow banks to boost efficiencies while keeping costs low:
"tens of thousands" of call center workers could be replaced by machines that "radically change or improve customers' experience while cutting costs."
Higher tech investments in conjunction with large scale headcount cuts could allow banks to boost efficiencies while keeping costs low in the long term: of total bank jobs, per Mike Mayo, a senior analyst at Wells Fargo Securities. Back office, branch, call center, and corporate employees are being cut by about a fifth to a third, whereas jobs in tech, sales, advising, and consulting are less affected. Mayo also points out that it can usher in the "golden age of banking efficiency.
The banking industry spends $150 billion annually on tech — higher than any other industry in the US — which should ultimately lead to lower personnel costs. Major banks' tech budgets are at a high: JPMorgan Chase, Bank of America, and Wells Fargo had tech of $11.5 billion, $10 billion, and $9 billion, respectively — allowing them to roll out advanced digital features that help attract customers while cutting personnel costs.
Layoffs pertaining to customer service jobs, in particular, can make room for technology-enabled functions like interactive voice response systems or chatbots. Chatbots — like Bank of America's "Erica" — have largely begun taking the place of call center functions. And alongside its recently announced job cuts, Wells Fargo may be working to make chatbot solutions even more sophisticated: It was recently for a natural language processing chatbot team manager who will "manage the AI/NLP model development for Chatbot/Virtual Assistance areas." Reducing headcount in customer service segments could ultimately boost efficiency and lead to cost synergies for banks while allowing them to dedicate funds to creating new solutions.
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