BoI: By 2025 tech will replace most bank employees

Hedva Ber
Hedva Ber

The banks have shed 3,200 employees since 2015, the Bank of Israel reports.

The number of jobs in the banking system fell by 1,300 last year, according to a report published today by Supervisor of Banks Hedva Ber. The Bank of Israel wrote that the number of banking jobs fell by nearly 3,200 in 2015-2017. "The efficiency ratio in banks is improving. Particularly noticeable is the improvement in medium-sized banks that suffered from inefficiency for many years, such as Israel Discount Bank (TASE: DSCT) and First International Bank of Israel (TASE: FTIN)," the report stated.

At the same time, the Bank of Israel notes that the efficiency ratio of banks in Israel is still lower than banks in developed countries. The ratio was 66.1% in Israel in 2017, compared with 62.9% in developed countries (a lower ratio means more efficiency).

At the outset of the report, Ber predicts that the streamlining processes at the banks will continue. "Globally, assessments are that by 2025 technology will replace a large proportion of the banking workforce. Even now there are areas of banking where technology has rendered many employees superfluous," she writes.

Commenting on the need for the banks to adapt themselves to technological changes in the sector and the need for continued efficiency measures, Ber writes, "… the banks and bankers must continue to act to adjust their business models decisively and with a forward-looking vision… Banks that implement the changes slowly and continue to operate along traditional methods will increase their risk of becoming uncompetitive and irrelevant in the not-too-distant future."

As part of their economizing measures, the banks this year continued the process of closing branches that they have followed in recent years. The total number of branches in the banking system fell by 25 this year, 2%, and is now 9% fewer that the peak reached in 2012.

Published by Globes [online], Israel business news - www.globes-online.com - on May 30, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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