Wells Fargo Securities predicts technological advances will cost 200,000 jobs across the banking sector in the next decade, according to the summary of a report seen by Banking Dive this week.
Back office, branch, call center and corporate employees can expect a 20% to 33% workforce reduction, with lesser impact on tech, sales, advising and consulting jobs, the bank's analysts wrote.
The banking industry spends about $150 billion per year on technology, eclipsing other industries, according to the report.
Wells Fargo's report is hardly the first to forecast technology's impact on headcount, but it may be the widest-ranging in recent memory.
Research firm McKinsey & Co. said in May that it expects the headcount for front-office workers to drop by almost one-third because of automation, Bloomberg reported.
Citigroup CEO Mike Corbat said in February that "tens of thousands" of call center workers could be replaced, according to Financial Times. And former Deutsche Bank chief executive John Cryan warned in 2017 that tech could swallow up to half of the bank’s 97,000 jobs.
"Tech can enable the biggest capital for labor swap in the history of banking, thereby allowing tech spend to reduce non-tech spend," Wells Fargo senior Securities analyst Mike Mayo wrote in the report. "The biggest future driver of savings is employee compensation, which are half of all bank expenses."
Tech spend also accounts for a greater percentage of revenue in financial services (5.75%) than in other sectors, Deloitte research found.
JPMorgan Chase set aside $11.4 billion to technology this year, and Bank of America spent $10 billion in 2018.
But big banks stand to be the ones most affected by an automation revolution. "Technology is a game changer for scale," Mayo said, according to Financial Times.
The change is noticeable in contact centers, said Michael Tang, a partner at Deloitte who leads the company's global financial services innovation practice, according to Bloomberg. "We're already seeing signs of it with chatbots, and some people don’t even know that they’re chatting with an [artificial intelligence] engine because they're just answering questions."
However, when banks operate like tech companies, the effort is not without risk. Capital One implemented an aggressive public cloud strategy and was heavily criticized when it disclosed a breach in July.
Outdated infrastructure also poses a risk, Wells Fargo said in its report. The key is implementing a digital strategy that anticipates bad actions from bad actors and establishes a clear response plan.
The banking industry's headcount has shrunk 16 times since 1935 and never by more than 55,000 in a single year, according to Federal Deposit Insurance Corp. data cited by Financial Times. "It's been a rocky 25-year marriage for banking and technology, but it's finally getting on course," Mayo said, according to the publication.