This week, two major Australian banks have announced significant job cuts, adding to a trend of increasing redundancies in the banking sector. Financial experts have warned that these layoffs will ultimately affect everyday customers, who may experience diminished service quality.
Over the past year, various banks have opted for mass layoffs as part of strategies to enhance profitability, reduce operational costs, and adapt to the growing digitisation of financial services. As noted by money expert Joel Gibson, the reduction in workforce raises concerns regarding customer service. He indicated that difficulties in receiving adequate service could worsen with fewer staff available.
The rollout of AI technology, particularly at the Commonwealth Bank, has sparked apprehension among customers who doubt the efficacy of automated systems compared to human interaction. Unfortunately, as banks continue to downscale their workforce, customers may have to rely more heavily on AI, chatbots, and digital banking options. Despite the reduced workforce expenses, Gibson expressed scepticism that these savings would translate into lower fees for customers.
Wendy Streets, president of the Finance Sector Union, highlighted that AI is reshaping the banking landscape, but she and other experts, like Dr. Evan Shellshear from The University of Queensland, stressed that attributing layoffs solely to AI could be misleading. Only the Commonwealth Bank has cited AI as a reason for job cuts, implying that other factors may also be at play. Certain banking functions can be automated; however, skills such as communication and management remain irreplaceable, raising concerns about the offshoring of jobs, which could compromise data privacy.
Streets emphasised the importance of transparency, urging customers to inquire about the handling of their data, especially if it is processed offshore in jurisdictions with weaker privacy regulations. She argued that banks, which frequently record substantial profits, should be investing in their employees instead of laying them off. Upskilling current staff to adequately collaborate with AI would help mitigate job losses.
As the competitive banking environment faces mass layoffs, finding new employment may become increasingly challenging for those affected by the cuts. Streets remarked on the robust profitability of Australia’s leading banks, suggesting there is no justification for displacing experienced workers. This approach is viewed as inadequate, given the banks’ strong financial standing and the critical need for a supportive workforce in the industry.