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Banks could suffer massive wave of job losses analysts say in 2021


Banks could suffer massive wave of job losses analysts say in 2021

According to a report, although the banking industry has played a huge role in the U.S. economy for decades, as their jobs succumb to automation in the next few years, thousands of frontline workers in the industry may find their role more and more important. The smaller. 

Wells Fargo analysts predicted in a research report this week that as major U.S. banks increase investment in digital banking and other technologies, approximately 100,000 jobs may disappear in the next five years. The roles expected to disappear include branch managers, call center employees, and tellers. Artificial intelligence, cloud computing, and robots will play a greater role in daily banking operations, such as making payments, approving loans, and detecting fraud.

According to Wells Fargo, the disappearance of these jobs may be parallel to the massive contraction of manufacturing jobs in the 1980s and 1990s.

The analyst wrote: “[O] Our conclusion remains that this will be the largest layoff in Bank of America’s history. Once the economy fully recovers from the COVID-19 pandemic, the layoffs will accelerate.”

Consumers should expect that the number of bank branches across the country will decrease, and the size of the remaining bank branches may shrink.

Wells Fargo said: “Branches may see a decline, especially considering more digital bank adoption during the pandemic.” “Many branches closed during the pandemic may close permanently [and] new mergers in the future may also be possible. Will reduce the number of branches."

Large banks have continued to grow in the past 20 years, and got rid of the impact of the 2008 financial crisis after receiving bailouts from taxpayers. The financial sector accounts for 19% of the country's GDP, up from 13% in 2000. Despite the growth in the financial industry, between 2007 and 2018, the country’s four major banks laid off 300,000 jobs.

Long-term trend COVID-19

To be sure, the banking industry has been shrinking over the years as small and medium-sized banks have been acquired by large institutions.

"Bank consolidation is a long-term trend," FirstBank CEO Jim Reuter told federal lawmakers in a congressional hearing on Wednesday. "In fact, this has been part of the conversation ever since I was in banking. In 1984 we had 17,886 banks, and today we have 4,951."

Although there are fewer physical branches and institutions, Reuters describes the banking industry as "a diversified and highly competitive industry that contributes to the development of the U.S. economy every day."

Banks could suffer massive wave of job losses analysts say in 2021

The pandemic is accelerating the automation of certain industries, especially in industries where it is difficult to hire workers. For example, the restaurant industry has been one of the most obvious adopters of robotics and other technologies.

Although automation threatens the jobs of workers of different races, research by management consulting firm McKinsey found that Hispanics and black Americans are most likely to lose their jobs. McKinsey stated that Hispanic communities may lose 25% of their jobs, while black Americans face a 23% displacement rate. In contrast, Asian and white workers each account for 22%.