Global Banks Also Hit by 'Layoff Storm'... 780,000 Employees Left Last Year, Largest in 4 Years

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[Asia Economy Reporter Kwon Haeyoung] Last year, the scale of layoffs at global banks reached 780,000, the largest since 2015. While the number of personnel handling traditional banking tasks decreased, hiring of digital personnel increased in line with the fintech (finance + IT) trend.

According to Hana Financial Management Research Institute on the 23rd, the scale of job cuts at over 50 global banks recorded 778,000 in 2019. The number of layoffs, which had been decreasing from 914,000 in 2015 to 745,000 in 2016, 666,000 in 2017, and 418,000 in 2018, nearly doubled in just one year last year.

In particular, layoffs were prominent in Europe, where the export-driven economy worsened due to global trade disputes and bank profitability declined due to negative interest rates. European banks cut 63,611 jobs last year alone, accounting for 82% of the total global bank job cuts. Deutsche Bank reduced its workforce by 18,000, Santander by 5,400, and HSBC by 4,000. The research institute analyzed that the actual scale of job reductions is likely larger, as many banks quietly proceeded with layoff plans.

On the other hand, hiring of digital specialists increased. Reallocation of existing personnel to digital sectors also took place. Global consulting firm Accenture predicted that 7-10% of financial tasks will be automated by 2025.

In the United States, from August 2018 to July 2019, job postings related to artificial intelligence (AI) and data technology in financial companies increased by more than 60% compared to the previous year. Citibank in the U.S. announced plans to hire 2,500 engineers this year, and Lloyds Bank in the UK stated its intention to retrain existing employees and reassign 75% of them to new digital roles.

Domestic banks in Korea are also conducting regular voluntary retirements every year to reduce staff while increasing fintech personnel recruitment. The five major banks?Shinhan, KB Kookmin, KEB Hana, Woori, and NH Nonghyup?reduced 8,661 employees through voluntary retirement over three years from 2017 to the end of last year. Meanwhile, they are expanding IT and digital departments and increasing both new graduate and experienced hires.

Hana Financial Management Research Institute advised that domestic banks should establish concrete comprehensive workforce restructuring plans. Suyeon Cho, a research fellow at Hana Financial Management Research Institute, said, "In an environment with low labor market flexibility, it is difficult for domestic banks to pursue rapid structural improvements like global banks through new hires alone. It is necessary to develop workforce plans for strategic restructuring and implement comprehensive strategies including retraining existing personnel, hiring external talent, and applying automation."

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