News the other day that Royal Bank of Scotland
(RBS) is to outsource 215 back office jobs to India is just the
latest banking bad news story to make the front pages.
According to RBS, shipping out the jobs to
India will increase efficiency (at best, debatable) and allow it to
improve customer service (pull the other one).
Go deeper with GlobalData
David Fleming, national officer of the union
Unite, described RBS’ decision as “outrageous”. In the next few
years, Fleming is going to become more and more outraged; he is in
for a very busy time.
Since the banking crisis gathered pace post
Lehman in 2008, job losses have tended to focus on the back office;
investment banking roles have also been scaled back.
Staff performing IT and other support roles
have been particularly badly hit in the past three years at the
high street lenders. Last year alone, HSBC announced plans to axe
30,000 positions around the world.
Lloyds said that it would eliminate 16,800
positions, about one in six of its total workforce.
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By GlobalDataElsewhere, Barclays is dispensing with 3,000
roles and counting and it is the same story at major banks across
Europe.
Last year, banking job cuts across Europe
topped 70,000. The consumer press has not yet woken up to the fact
the worst is yet to come. Job losses at UK high street branch level
for example, have barely started.
Take RBS. It is one of the most enthusiastic
cost cutters in the high street – all of course part of its
masterplan to “rebuild the bank”.
Last year, it managed to lose a mere 500
branch staff, reducing retail banking total employment from 28,200
to 27,700.
There is far worse to come.
The banks will have a strong argument that a
large part of the job losses result from changes in customer
behaviour; there will be more talk of streamlining the business and
a desire to keep redundancies to the “absolute minimum”.
You can also write the UK government script
now: it was the last government that bailed out RBS and Lloyds and
repayment of taxpayers’ funds is the priority.
Oh and in case anyone has forgotten, it was
the Labour government that gave Fred his knighthood.
Is there any way that massive job losses at
branch level can be avoided? Not much.
To misquote Noel Coward, don’t put your
daughter (or son) into a high street bank, if job security is high
on your parental agenda.
The reasons for this go beyond banks’ desire
to cut costs. Customer behaviour is undergoing a revolution, albeit
heavily promoted of course by the banks.
Almost half (44% and rising) of UK customers
already bank on the internet while the majority of banks now offer
mobile phone banking, albeit in fairly basic formats.
The death of the branch is vastly
exaggerated.
Metro Bank is proving that there remains life
in the branch channel.
But the stark fact is that bank branch visits
are in terminal decline. Banks are cottoning on to greater use of
the latest technology.
Increasing the use of social media in an
effort to improve customer service will also ramp up branch job
cuts.
Most UK lenders consider that they currently
have far too many branches – and that is despite total UK branch
numbers falling by 20% in the last decade.
Since 2000, Barclays’ branch network for
example has shrunk from 2,129 to 1,700; HSBC is down from 1,670 to
1,300 during the same period.
As branch closures accelerate across the
sector, the total job losses will make 215 jobs going off to India
seem very small beer.
