According to reports, Deutsche is in the process of cutting jobs to scale down costs. Last year, the Bank’s Chief Executive John Cryan said that he believed that the way forward for the bank was to improve mechanisation and reduce manual labour.
Automation and better technology have been labelled as the main culprits for future unemployment. This is because robots and automation will be able to do the jobs that were previously held by human beings.
In 2017, research firm PwC conducted a study that revealed that countries across the world will begin losing jobs to automation. The study noted that in the next 15 years, 40 percent of jobs in the U.S. may be vulnerable to automation and robots. In the same time frame, 35% of jobs in Germany could be replaced by automation and 30% of jobs in UK will become vulnerable. In Japan, 21% of jobs will become vulnerable to robots and automation.
Deutsche Bank AG is a German banking and financial services company with over 100,000 employees from across the world. The bank has a presence in over 70 countries with a large footprint especially in Europe and the Americas as well as emerging markets like India.
Deutsche Bank Chief Executive John Cryan had previously expressed his belief that the firm needs to cut down staff in favour for automation. In an interview with Financial Times late last year, he said, “We employ 97,000 people. Most big peers have more like half that number… We’re too manual, which can make you error-prone and it makes you inefficient. There’s a lot of machine learning and mechanization that we can do.”
He added later, “In our bank we have people doing work like robots. Tomorrow we will have robots behaving like people. It doesn’t matter if we as a bank will participate in these changes or not, it is going to happen. The truthful answer is we won’t need as many people. In our banks we have people behaving like robots doing mechanical things, tomorrow we’re going to have robots behaving like people.”
On Monday, Bloomberg published a report based on inside information that Deutsche Bank is currently in the middle of cutting between 250-500 corporate and investment banking jobs. This story was later confirmed by Reuters.
According to reports, the company had cut a number of people in mid to high level positions across the US and Europe. This included the head of corporate broking in the UK, head of European energy investment banking, and senior financial institution brokers.
Some analysts have noted that these cuts come weeks after the bank announced an annual loss of approximately 500 million euros last year. In his year-end statement this February, Cryan stated, “We believe we are firmly on the path to producing growth and higher returns with sustained discipline on costs and risks.”
This is the third consecutive year that the company has run losses. Commentators have observed that last year the bank had reported a decline of revenues by 15%, and a simultaneous rise of compensation and benefits by 8%. Cryan had previously stated that bonuses would be cut.
Investment banking was reportedly a weak sector in the last quarter, however, according to the Financial Times, bank officials have stated that these cuts were only a part of their long term cost cutting measures. The bank intends to cut 3.8 billion euros in spending by 2015. Since 2015, the bank has let go of approximately 3,500 employees.
As we had predicted earlier, Deutsche Bank’s actions are indicative of a trend towards decreased reliance on manual labour. We believe that a transition towards automation will result in a loss of jobs, similar to the crisis that resulted from the mechanisation of factory jobs. Jobs related to service and repetitive actions such as data entry in particular may be in danger. As other corporations follow this trend, governments will have to work to cope.