Standard Bank South Africa, one of Africa’s largest banking institutions, will cut 1,200 jobs and close 91 branches in the nation. The reason? Digitization of banking operations and systems. If you add the auxiliary workers like guards and contractors (cleaners, cooks, gardeners, etc), you may be looking at 3,000 people losing their jobs. Yet, check the financials in 12 months, the bank will likely hit better numbers as the customers serve themselves, by themselves, using their smartphones and laptops. This is the new normal.
South African lender Standard Bank will cut around 1,200 jobs and close 91 branches as part of efforts to digitise its retail and business bank, it said on Thursday.
South Africa’s lenders, like others around the world, have been shuttering branches and trimming their headcount in an attempt to cut costs and adapt to customers’ growing preference to bank online or on their mobile phones.
“This has not been an easy decision to make,” the bank, South Africa’s largest by assets, said in a statement, adding it would implement a “comprehensive exit package” that goes beyond the legal requirements
This is a big trajectory in the world and especially in Africa. Take a walk from CBN headquarters in Abuja to the Cadastral zone in the Central Business District in Abuja, count the number of bank branches remaining. If you are street-aware, you would have noticed that more than 50% of the branches have closed shops there, including Union Bank which used to occupy a big space at the end of the Cadastral zone, and Sterling Bank, in the last two years. The remaining ones have been severely trimmed. That is partly why many of the banks are returning superior cost-to-income ratios as operating (labour) costs have been shelved to the bones.
Take that experience around the nation and the conclusion is this: software is eating banking, and workers are being displaced. Sure, some will argue they can get other jobs. Unfortunately, it does not work that way. Nigeria has only three key sectors now that pay really decent wages across board: oil & gas, telecoms and banking. Others are sub-optimal.
As the world looks at the impacts of automation and digitization, Africa needs to get to work also.