Thousands of bank staff likely to lose jobs after digitization

More employees in the banking industry will be left jobless as lenders increasingly invest in mobile and online platforms, visiting banking and financial services technology expert Brett King has said.

Many banks have resorted to downsizing to cut costs amid dwindling revenue margins.

On September 14 last year, the Banking (Amendment) Act 2016 was enforced which reduced lenders’ earnings by capping interest on loans at four percentage points above the Central Bank Rate.

As a result, the lenders have been unable to cope, considering their high operational costs, resorting to massive staff lay-offs.

The bulk of most banks’ earnings meets operational costs, while the remaining income is invested or paid to shareholders as dividends.

“The fastest ever change in financial inclusion with access to financial services we have ever seen in the history of mankind occurred right here in Kenya,” King said during a discussion on Fintech themed Becoming the Future of Banking in Nairobi.

“Not because of bank branches, but because of mobile phones. There are bank tellers who are probably going to lose their jobs because of this success (automation).”

Banks sacked 2,036 staff, largely in clerical and secretarial units in 2015, as lenders automated their systems to enhance operational efficiency, the Central Bank said in its last Banking Supervision Annual Report.

Official figures of the staff laid off last year are yet to be released. About nine banks have announced plans to retrench staff in an ongoing digitization process.

They include Equity (about 400 through natural attrition), Standard Chartered (300), NIC (32), Family (unspecified), National Bank (unspecified), Ecobank (unspecified), Bank of Africa (unspecified), First Community (106) and Sidian (108).

Others have announced a freeze on staff recruitment as they shift investments to technology-driven platforms.

“Unless we create more service industries, we are going to see a net loss of employment,” King said. “If you have any children in university doing a finance degree, a legal or even accounting degree, these are the top industries where technology will affect business over the next few years… some of these old jobs are just going to go.”

As globally revolutionary mobile money transfer platform, M-Pesa, marks 10 years of success, banks are increasingly tapping the platform to expand their footprint.

KCB Group CEO Joshua Oigara said in the past two years, the lender has recruited more than eight million customers on the KCB M-Pesa platform – more than double the customer base on its brick and motor branches.

“We have branches remaining for some kind of work but in reality the shift for our business is going to be using the mobile as the basis to drive a better experience and better relationship with our customers,” Oigara said.

Another such thriving platform is Equity Group’s Equitel whose year-on-year mobile money transfer subscriptions more than doubled at 140.23 per cent to 2.09 million subscriptions in the quarter ending September.