How Automation Is Stealing Jobs From China's Bank Workers

The popularity of ATMs and mobile payment systems is making traditional teller jobs obsolete.

By Dou Benbin

In order to cut costs, save face, and preserve social stability, China’s banks are currently attempting to stealthily trim away some of their approximately 3.8 million branch employees. Many banks have creative, even ludicrous, methods of achieving this goal.

For example, one major bank recently implemented basic job skills testing for its interbank operations employees. Staff had to recite benchmark interest rates over a 10-day period, write down from memory the bank’s line-of-credit forms for other banks, and give the trading holidays of different G-20 nations. Employees whose results failed to meet standards were instantly demoted to lower-paying teller positions.

Another mid-level bank kicked off a “new account competition,” requiring its account managers to share 10 posts per day on their WeChat Moments page — the messaging app’s equivalent of a social media feed. Staff members whose posts received fewer than 1,000 likes were transferred to the company’s internal academy for additional training.

Strangest of all, one small bank began holding a series of art performances that all employees were required to take part in. The best three performers were awarded prizes, but employees who did not receive a prize were sent to a new department for additional training. Employees who did not give performances or who were unwilling to wait around watching rehearsals every day did not have their contracts renewed at the end of the term.

Aside from these examples, there are several additional “evaluation” methods that have caused interbank employees to lose their jobs. So far, the number of people affected is still proportionally small, but the psychological impact of this trend is already quite clear.

From 2009 to 2015, the number of people employed by China’s banks grew at a sustained, relatively rapid pace. However, this trend reversed last year. The Industrial and Commercial Bank of China (ICBC), the largest bank in the world in terms of total assets, laid off 14,000 tellers from among its more than 16,000 branch locations in 2016. In the same year, the number of tellers at China Construction Bank (CCB) and the Agricultural Bank of China (ABC) decreased by around 30,000 and 11,000, respectively.

In 2016, China’s top four banks — ICBC, CCB, ABC, and Bank of China — shed some 60,000 employees. When you factor in the various medium- and small-scale banks and credit unions, the banking industry as a whole probably lost more than 100,000 employees last year. There are estimates that another 300,000 jobs will be gone in the domestic banking sector in the next three years as this storm of layoffs continues.

In fact, a wave of redundancies is sweeping over the banking industry worldwide. According to Citibank’s estimates for industrial countries, 30 percent of banking industry employees — nearly 2 million people — will find themselves jobless in the next decade. Other predictions have claimed that the world banking industry will need to cut away half of its employees and branch offices to survive the transition.

In China, some have claimed that mobile payments are to blame, saying that these new payment methods — the most well-known of which are Alipay and WeChat Pay, pioneered by internet giants Alibaba and Tencent, respectively — are stealing banks’ livelihoods. However, as deposits and withdrawals can be carried out at most ATMs, it is more accurate to say that mobile payment methods are becoming a substitute for a select few overlapping functions of teller machines.

Statistics compiled by bank regulators indicate that the Chinese banking industry employs approximately 3.8 million people, with around 80 percent working as bank tellers. Advances in financial technology mean that ATMs can now take care of much of the work originally handled by tellers, such as opening accounts and making withdrawals and deposits. Nowadays, when you go to a bank, the lobby manager will almost always guide you to an ATM and show you how to conduct the desired transaction yourself.

The past 10 to 20 years have seen ATMs come into widespread use, effectively automating a massive number of simple, repetitive transactions. Meanwhile, the wave of urbanization that took place over that same period led to a rapid expansion of new branch locations that has not yet subsided. This interplay between forces of addition and reduction has kept the layoff issue hidden from view.

Even despite the 2016 layoffs, China still boasts four of the world’s five largest publicly traded banks in terms of the number of employees. Layoffs by China’s major banks have come at a time when banks are under serious pressure to perform. Thanks to cost reductions and lower-than-expected provisions for bad debts, China’s four major banks just managed to avoid a decline in overall profit for 2016 — which would have been the first such occurrence since 2004. Last year, the four major banks boasted an annual net profit of 858 billion yuan ($126 billion), an increase of 0.2 percent from the previous year.

Undoubtedly, the rising popularity of Alipay and WeChat Pay has reduced the use of cash in China. From the outside, it looks like mobile and digital payment methods are taking away clients. But dig deeper and it is obvious that advances in financial technology mean that the banking industry simply doesn’t need so many people anymore.

Automation, massive layoffs, branch closings — these are the seemingly inescapable nightmares the current generation of bank employees must face. A recent report by accounting firm KPMG indicated that by 2030, traditional banks and their associated services might “disappear.” Virtual assistants like Siri will take charge of providing personal and financial services to clients. Transactions and the basic business structure of banks, including money transfers, withdrawals, settlements, and risk control won’t change, but there will be a fundamental difference in how banks interact with consumers. For example, the Royal Bank of Scotland is planning to release an online artificial intelligence customer service system that will be able to respond to changes in a client’s tone of voice. What’s more, the AI account manager won’t need to take breaks and will never demand overtime pay.

The writing’s on the wall. The traditional banking industry will face an enormous revolution in the near future, and there will be a noticeable oversupply of general, common financial services. Out of the 3.8 million people working in the Chinese banking industry, fewer than 30,000 of them are considered high-value human resources. The fates of most of the rest are hanging in the balance. In this age of rapid digitalization and automation, it is time for those of us in the latter camp to begin thinking about when to take our leave, and how to do so with our dignity intact, before our destined departure from the industry.

Translator: Brian Bies; editors: Lu Hongyong and Matthew Walsh.

(Header image: Customers queue at a bank in Nanjing, Jiangsu province, May 5, 2008. An Xin/VCG)

Author Bio:

Dou Benbin is the risk manager at a village bank based in Shanghai.

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