Banking is reaching an “Uber moment” in which technological advances will lead to hundreds of branch closures and a possible halving of the number of staff employed in the sector, the former chief executive of Barclays has warned.
Jenkins, who was ousted from Barclays in July, said: “The number of branches and people employed in the financial services sector may decline by as much as 50% over the next 10 years, and even in a less harsh scenario I predict they will decline by at least 20%.”
If his predictions come true, Barclays could cut between 26,000 and 66,000 jobs worldwide, and shut between 280 and 700 branches on the high street.
Jenkins was delivering a speech at Chatham House entitled Approaching the Uber Moment in Financial Services.
When he was in charge of Barclays, Jenkins regularly discussed the impact of new technology on the industry. As long ago as 2013, he had been foreseeing circumstances under which 40,000 roles from the 140,000-strong workforce could be axed as technology automated services and cut costs.
Barclays has been attempting to lead the way with new technology alongside its branch network. New banks that will not have any branches are being set up, notably Atom bank, which intends to operate entirely as a smartphone app. Spanish bank BBVA this week took a 30% stake in Atom, spending £45m to get its first major foothold on retail customers in Britain.
These new banks have advantages over the incumbent players, which are weighed down by high cost bases of branches and old technology. Eventually they may be forced into mergers, Jenkins said.
“The barriers to entry are quite high in financial services, so that will allow the incumbents to probably last longer than in many other industries.
“The risk is that incumbents will be pushed into this utility, capital-heavy role that we’ve seen in other industries like telecoms. Ultimately, that will become intolerable to shareholders, so we could see consolidation and mergers,” he said.
He also said there was a major challenge for the banking industry in recruiting staff. “If banks want to really compete for talent successfully, they are going to have to make themselves interesting places to work. It can’t just be about the money, because frankly the money isn’t going to be there the way it was before 2008,” Jenkins said.
This article was written by Jill Treanor, for theguardian.com on Wednesday 25th November 2015 12.12 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010