There can be a likely erosion of some 30 percent of banking jobs in the next five years because of developments in technology, said Vikram Pandit, who ran Citigroup Inc. during the financial crisis.
In a television interview on Wednesday, Pandit, 60, said that the need for humans and staff in multiple bank roles such as back-office functions, would be reduced or even eliminated by the emergence and rapid development of artificial intelligence and robotics technologies. Pandit is now the chief executive officer of Orogen Group, an investment firm that he co-founded last year.
“Everything that happens with artificial intelligence, robotics and natural language — all of that is going to make processes easier,” said Pandit, who was Citigroup’s chief executive officer from 2007 to 2012. “It’s going to change the back office.”
Many employees in Wall Street’s biggest firms have been either forced to adapt or to find new positions as such firms are engaged ore and more in the use of technologies that include machine learning and cloud computing with the aim of automating their operations.
The firm will keep cutting costs by finding more ways technology can replace people, Bank of America Corp.’s Chief Operating Officer Tom Montag said in June.
The timeline proposed by Pandit is very aggressive even though his forecast for job losses is in step with one made by Citigroup last year.
Primarily due to automation in retail banking, the lender estimated a 30 percent reduction between 2015 and 2025 in a March 2016 report. And Citigroup said that the forecast means that there would be a fall of about 1 million jobs in Europe while an estimated drop of full-time jobs of 770,000 in the U.S. would also happen.
Caution against overreacting to the impact of technology on job was issued by JPMorgan Chase & Co. CEO Jamie Dimon in June. Dimon said in an interview published on LinkedIn that other opportunities are helped to be created even while the bank is using technology to reduce costs. As it hires more technology workers, employee numbers at his firm will continue to rise, he predicted.
Pandit foresees the emergence of “specialist providers” as well as consolidation in the industry and adds that the banking industry is becoming “enormously competitive”.
“I see a banking world going from large financial institutions to one that’s a little bit more decentralized,” he said.
Home equity finance firm Point Digital Finance Inc. and non-bank financial startups such as student-loan venture CommonBond Inc. are places where Pandit has invested in since leaving the firm. In order to acquire stakes in mature financial-services companies he formed New York-based Orogen last year with investment firm Atairos Group.
(Adapted from Bloomberg)