Human Bankers Are Losing to Robots as Nordea Sets a New Standard
Human Bankers Are Losing to Robots as Nordea Sets a New
Standard
By Niklas Magnusson July 29, 2018, 3:00 AM PDT
Something interesting happened in Swedish finance last
quarter. The only big bank that managed to cut costs also happens to be behind
one of the industry’s boldest plans to replace humans with automation.
Nordea Bank AB, whose Chief Executive Officer Casper von
Koskull says his industry might only have half its current human workforce a
decade from now, is cutting 6,000 of those jobs. Von Koskull says the
adjustment is the only way to stay competitive in the future, with automation
and robots taking over from people in everything from asset management to
answering calls from retail clients.
While many in the finance industry have struggled to
digest that message, the latest set of bank results in Sweden suggests that
executives in one of the planet’s most technologically advanced corners are
drawing inspiration from Nordea.
At SEB AB, CEO Johan Torgeby now says that “whatever can
be automated will be automated.”
Nordea, which is the only global systemically important
bank in the Nordic region, saw total costs drop 11 percent in the second
quarter from a year earlier as staff numbers fell 8 percent to about 29,300. By
comparison, Barclays Plc, which has roughly the same market value as Nordea,
had almost 80,000 employees at the end of 2017, according to the latest
figures. (To be sure, Barclays’s assets are more than twice as big as
Nordea’s.)
Nordea Reaps Reward of Strategy Upheaval After a
Punishing Year
SEB, Svenska Handelsbanken AB and Swedbank AB all
acknowledge that adding technology is key. But they have different ideas about
the extent to which humans need to be replaced by robots and they’ve been far
more restrained with job cuts than Nordea. Some banks have even gone on a
hiring spree to add technology specialists and computer scientists.
Nordea’s lower costs helped it deliver a 31 percent
annual increase in operating profit last quarter, the best performance of
Sweden’s four main banks. And after waiting roughly a year for Nordea’s digital
plan to pay off, investors were rewarded when the bank’s earnings report
triggered the best share-price performance since early February.
Other Swedish banks are now trying to automate more and
to do so faster. SEB’s Torgeby says there’s no question that new technology is “impacting
customer behaviors and disrupting banks’ existing business models.”
And a bank that had previously stood out for its
reluctance to replace branches with automation appears also to be adjusting its
approach. Handelsbanken CEO Anders Bouvin now says going more digital will make
the bank’s operations more efficient, and he wants management to push through
“strategic initiatives for business development and efficiency
improvement."
Handelsbanken plans to unveil more details after the
third quarter. Swedish media have reported that the bank’s automation plans may
put about 2,000 employees out of work, though Bouvin has so far said he doesn’t
want to fire people.
At Swedbank, CEO Birgitte Bonnesen has been looking for
ways to automate more services since she took the helm in 2016. The bank, which
for almost two years has had a separate digital unit, has also focused on
automating mortgage applications.
But to date, the only Swedish bank to have seen its
headcount go down in any significant way is Nordea. There were about 2,500
fewer people working there at the end of the second quarter than there were a
year earlier. Meanwhile, staff numbers at the other three banks were largely
unchanged.
Von Koskull says it’s not just finance that has to go
through this adjustment.
“We all need to understand that our industry, and many
other industries and society, is going through a tremendous change,” he said in
an interview earlier this month. And that’s something that “we need to be
prepared for.”
— With assistance by Rafaela Lindeberg, and Donal Griffin
https://www.bloomberg.com/news/articles/2018-07-29/human-bankers-are-losing-to-robots-as-nordea-sets-a-new-standard
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