Bill Gates said, ‘Banking is necessary, banks are not’. With the amount of technology available to customers in 2024, who needs people working in financial services? Yet if banking is necessary, will there still be plenty of jobs in 2034?
Headlines featuring closed bank branches are at odds with the overall pattern of employment in financial services. The sector remains a key employer in the UK with some 1.1 million employed according to State of the Sector Annual Review, published by The City of London. That is now, but what is the outlook for the UK and those currently employed?
Financial services have been a significant source of employment in the UK, which has been reasonably stable despite the impact of the financial services crisis of 2007-09, and the more recent pandemic.
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Number of employees in the financial services sector in the United Kingdom from 2001 to 2021 – Statista
Currently employment patterns remain positive. In the Chartered Institute of Personnel & Development’s Spring 2024 Labour Market Outlook the sector has a positive employment balance of 27, meaning taking on more people than are leaving. Hard to fill vacancies have reduced considerably though – it is easier to find people than it was. But what of longer-term trends?
Outsourcing banking work to customers – at one time you had to ask someone to transfer money between accounts
Historically technology has been both opportunity and threat for employment, from Luddite textile workers through Ford’s production lines and globalisation. Outsourcing banking work to customers – at one time you had to ask someone to transfer money between accounts – has also seemingly reduced employment requirements, while arguably improved customer service.
The technological opportunity and/or threat in 2024 seems to come from Artificial Intelligence (AI), already being deployed for handling more routine transactions. This is most noticeable in those factories of the early new millennium – call centres – where calls handled by humans alone are down to 47% according to Engagecustomer, a contact centre blog.
https://www.engagecustomer.com/blog/uk-contact-centre-trends-for-2024
Greater use of customer technology though must be most evident in your pocket or on your desk via your mobile phone. Some 70% of bank customers now use their banks mobile app, a stat reflected in other financial sectors like wealth management and insurance. Financial services have frequently been regarded as a distress purchase in marketing speak, meaning customers use or buy out of necessity rather than desire. Making the processes easier and quicker helps reduce the ‘distress’.
Challenger banks in the UK like Monzo and Starling Bank have led the way with online only interaction, and approval processes for new customers which take minutes.
Yet the technology still needs people to keep an eye on it. Inevitably it does not work 100% of the time, and there are glitches which cannot be sorted by AI alone.
Customers also like the reassurance of talking to human beings when – it is not if – the technology goes wrong. The occasional software update is necessary and usually scheduled away from busy periods. Yet technology will either break or malfunction, leading to complaints and possibly defection to competitors.
The breadth of customer requirements also means while large numbers of simple and frequent transactions are made relatively easily, processes for less frequent events, for example reporting the passing of a customer, need more than an AI touch point.
Technology attracts people in a less desirable way too.
Willie Sutton, a bank robber, gave his reason for robbing banks: “That’s where the money is.” Modern day Willie Suttons do not have to go into a building with a shotgun: vast increases in online fraud, sometimes caused by the theft of customers’ phones – means checking transactions, preventative steps and restring customers’ accounts need human intervention.
The crime is not just for the robbers. Those who rob need a way to turn their loot into cash, and their revenue into something more reputable. This is reflected in the number of Money Laundering Officers now working in all areas of financial services, as legitimacy for criminals and illicit funds remains desirable.
While attracting people to work in the various sub sectors of financial services is currently easy, one attraction for prospective employees is higher degrees of flexible and hybrid working, seen as desirable employer attributes for many. Exact numbers now working in offices or homes remain somewhat flexible, as expected, but figures from contact centres starkly show the pandemic effect of flexible work (in terms of hours and days) and hybrid (in terms of working location).
https://www.engagecustomer.com/blog/uk-contact-centre-trends-for-2024
Reports of some bosses now demanding their teams back to the office feature more highly in investment banking, where immediate feedback and training through on job and in deal experience are prized. Yet for more quotidian transactions, table at home and a laptop may be just enough.
People continue to need banking, in Bill Gates’ words, and one set of people still need banks: regulators. Greater regulatory demands since the ‘light touch’ years in the early 2000s show no signs of diminishing. They are focused not just on systems and processes but human behaviour, and its regulatory term compliance.
The need for compliance sets up an industry that should be easier to regulate, yet regulation also provides the need for institutions providing financial services to be readily compliant. While the rationale for the recent sale of financial services divisions by supermarkets Sainsburys and Tesco in the UK, plus consolidation of Virgin Money into Nationwide and Co-Operative Bank into Coventry Building Society, shows not just a strategic alignment to core business, but perhaps a way of focusing specialist compliance knowledge within a convenient organisational set up. Maybe the Financial Conduct Authority (FCA), the UK regulator, has an interest in keeping its friends (consumers) close but it’s enemies (banks, insurers, wealth managers and other institutions) closer?
Institutions still need human decisions about pricing, product availability and how to ensure they remain competitive.
When cars became more common forms of transport in the early 1900s, people didn’t immediately shoot all the horses. It looks like the incumbent banks, despite the challengers, will be around for a while. Despite the technology, that flatlining of employment in financial services looks set to continue.
