A wave of job cuts across Australia’s banking sector highlights the impact of technological advancements and profit-driven strategies on employment. The latest announcement came from Bendigo and Adelaide Bank, which plans to eliminate 158 jobs, primarily in its technology division. This decision follows significant layoffs at other major banks, including National Australia Bank (NAB), which is cutting 410 jobs, and ANZ Bank, which is reducing its workforce by 3,500 positions.
The Finance Sector Union disclosed these job cuts on October 12, 2023, as part of a broader trend affecting multiple financial institutions in recent weeks. The restructuring at Bendigo reflects a shift towards greater efficiency and the integration of new technologies. NAB’s cuts similarly target its technology and enterprise operations, underlining the sector’s focus on modernization.
According to Hugh Dive, chief investment officer at Atlas Funds Management, banks are not only responding to the immediate pressures of upgrading IT infrastructure but also seeking returns on these investments. Dive noted that the trend is driven by a desire to streamline operations. “If you can stop some manual handling in the back office, that’s a good outcome, and that’s what they do,” he explained.
The pressure on profits is further compounded by rising operational costs, including staff wages. Nathan Zaia, an analyst at Morningstar, pointed out that while banks consolidate their IT systems, they can enhance risk management and efficiency. “If you can make each banker be able to write a loan faster, you probably don’t need as many bankers over time,” Zaia said. He believes the current job reductions represent a gradual evolution within the industry rather than an abrupt shift.
While ANZ’s cuts are the most substantial, Westpac is also undergoing job reductions as part of a strategic initiative led by new chief executive Anthony Miller. Earlier this year, Miller encouraged managers to explore opportunities for a 5 percent staff reduction. In contrast, the Commonwealth Bank reported a slight increase in staff numbers during the last financial year.
Analyst Matt Wilson emphasized that banks are reacting to stagnant profit growth amid decreasing interest margins. He noted that as earnings come under pressure, banks are compelled to tighten their belts. “There’s just pressure on earnings, so they are all tightening their belts,” he commented. Wilson has previously indicated that the major banks have a “material opportunity” to lower their cost-to-income ratios, a crucial performance metric for investors.
The Finance Sector Union has criticized Bendigo’s move, stating that it stems from a long-term plan to “optimise” branch operations and increase efficiency through automation. The union warns that such changes could lead to diminished customer service quality. In response, a spokesperson for Bendigo stated the bank is committed to improving productivity and meeting customer expectations while continuing to engage with staff throughout the process.
The union has also taken action by filing a complaint with the Fair Work Commission, alleging that Bendigo failed to provide adequate information to affected employees regarding the job cuts.
As the banking sector grapples with these challenges, the ramifications of job cuts extend beyond financial institutions, affecting employees and customers alike. The ongoing restructuring raises questions about the future landscape of banking in Australia and the balance between technological advancement and workforce stability.
