The headlines of a few months ago citing a professional body that predicted a very high percentage of jobs will be lost to automation (or robots) are now this months worm food. Still let’s reflect on where we currently stand compared to just two decades ago.
In banking – which is the industry I once worked for (and some would incorrectly argue that I still do), 52% of lending is originated by people that work outside the bank (people like my partner and I). This percentage will continue to escalate. Relationships that are not yet outsourced will be in the coming decade. Banks will become processing centres.
The evidence is already there. All four banks have already adopted short desking (a version of hot desking) that ensures that up to 20% of staff no longer have somewhere to sit. While banks tout this as their way of getting the troops out to see their clients, the reality is otherwise. They’re preparing for the inevitable cull that takes place as technology improves.
CBD property is expensive. Why lease out extra floor space when you have the option of outsourcing much of your sales (back offices have long since moved to the burbs or offshore). You will also see fixed telephone lines disappearing from business cards. This is evidence that your relationship manager no longer has a permanent base.
We have been visited by these new young bankers recently and can attest to their abject misery in being treated this way. Most are Gen Y, intelligent and the things they have in common are that they are all unhappy in their current roles, they are sick of being promised certain rewards only to have the goal posts changed and they are all looking for alternative forms of employment.
Couple this with the militant focus on compliance training which take the form of meaningless on-line exams), sales meetings, ensuring systems are up-to-date, credit reviews, management reports – you’d be forgiven for thinking that clients occupy less and less of their thinking.
As well, and as I have articulated in previous articles, banks are lending to less and less industries and people. They have in-effect left a yawning gap to substitute lenders to occupy the space that they recently monopolised. More and more, my partner and I find ourselves talking to these substitute lenders rather than banks for commercial transactions.
The reasons for this are many but the key is that they are not regulated by APRA. APRA used to be far kinder to our banks and they all survived the GFC. The GFC has been used by APRA to scare the fecal matter from our politicians and thus give them a crusading role to dictate what industries the banks can/cannot lend to and in certain circumstances at what price (using capital ratios to force banks to adjust price).
The sad thing is that we’re past the point of no return. The banks have now switched to becoming processing centres and the outsourcing dog’s breakfast will be impossible to unscramble. There’s also fantastic processing software available for the processing of loans. It’s great automation that keeps our costs down – but at what price (to the wider economy)? Maybe the Chinese are the smart ones. They teach code to primary school students.
What can you do?
If you’re a borrower, find yourself a good finance broker now. It will save you a lot of heartache and money in the short, medium and long term.
If you’re a banker, smile it’s bonus season. Let’s see how well they treat you this year. Think back six years ago. At that time would you have considered the treatment being dished out to you by your organisation?
If you’re waiting for robots to take over your industry, relax. They don’t yet need robots, they have you.
The good news is that the many substitute lenders will continue to grow. The prestige of working for a processing centre will become apparent and the substitutes will start employing young bankers with skills – assuming you still have banking skills not form filling ones.