A Wells Fargo analyst has predicted the largest “reduction in U.S. bank headcount in history.” Banks are expected to cut 200,000 jobs as they strive to improve productivity and efficiency amid rising competition from fintech and non-bank financial institutions.
US Banking Sector to Experience Biggest Headcount Reduction
An analyst with Wells Fargo, Mike Mayo, has predicted that U.S. banks would cut 200,000 jobs, or 10% of employees, over the next decade, the Financial Times reported Monday. He explained:
This will be the biggest reduction in U.S. bank headcount in history.
Mayo said that low-paying jobs are most at risk, such as those in branches and call centers as banks adapt to the new realities following the coronavirus pandemic. He added that job cuts have been necessary as technology companies and non-bank lenders increasingly gained market share in the payment and lending business over the past years.
The analyst further commented, “If I was giving advice to my kids, I’d say you probably don’t want to go into the financial industry.” He noted that technology and customer or client-facing roles are probably the only areas that will see growth, emphasizing that “It’s likely to be a shrinking industry.”
“Digitisation accelerated and that played to the strength of some fintech and other tech providers,” Mayo said, elaborating:
Banks must become more productive to remain relevant. And that means more computers and less people.