Technology will cut 30% of banking jobs says former Citigroup CEO Vikram Pandit

Artificial intelligence and robotics reduce the need for staff in roles such as back-office functions, Mr Pandit said

The banker isn't the first financial boss to make such a stark prediction about the future of the industry (Reuters)

Vikram Pandit, who ran Citigroup during the financial crisis, has said developments in technology could cut the number of banking jobs by 30 per cent in the next five years.

Artificial intelligence and robotics reduce the need for staff in roles such as back-office functions, Mr Pandit said on Wednesday in an interview with Bloomberg in Singapore. He’s now chief executive of Orogen Group, an investment firm that he co-founded last year.

“Everything that happens with artificial intelligence, robotics and natural language — all of that is going to make processes easier,” said Mr Pandit, who was Citigroup’s chief executive from 2007 to 2012. “It’s going to change the back office.”

Wall Street’s biggest firms are using technologies including machine learning and cloud computing to automate their operations, forcing many employees to adapt or find new positions. Bank of America’s chief operating officer Tom Montag said in June the firm will keep cutting costs by finding more ways for technology to replace people.

While Mr Pandit’s forecast for job losses is in step with one made by Citigroup last year, his timeline is more aggressive. In a March 2016 report, the lender estimated a 30 per cent reduction between 2015 and 2025, mainly due to automation in retail banking. That would see full-time jobs drop by 770,000 in the US and by about one million in Europe, Citigroup said.

JPMorgan chief executive Jamie Dimon cautioned in June against overreacting to the impact of technology on jobs. While the bank is using technology to reduce costs, that helps create other opportunities, Mr Dimon said. He predicted that employee numbers at his firm will continue to rise — as it hires more technology workers.

The banking industry is becoming “enormously competitive”, Mr Pandit said, adding that he foresees the emergence of “specialist providers” as well as consolidation in the industry.

“I see a banking world going from large financial institutions to one that’s a little bit more decentralised,” he said.

Since leaving Citigroup, Mr Pandit has invested in non-bank financial startups such as student-loan venture CommonBond and home equity finance firm Point Digital Finance. He formed New York-based Orogen last year with investment firm Atairos Group to acquire stakes in mature financial-services companies.

Bloomberg