Will “Bankers” Soon Disappear? What’s Happening Now in the Job Market
Even if you are asked to provide consulting and IT skills now…
It has been a long time since it was reported that megabanks and regional banks have been struggling due to the triple threat of (1) population decline, (2) low interest rates, and (3) digitalization. In particular, in the retail business, online banks and online securities companies such as Rakuten Bank and SBI Securities are widely used not only by the digital native generation but also by the middle generation from their 30s to 50s and even seniors due to their convenience and low fees, and banks are relatively losing profit In relative terms, banks are losing profit opportunities.
Digital companies that own online banks and online securities firms generally have advantages in (1) management speed, (2) technology, and (3) digital human resources, and unlike existing banks, they do not have excess staff and excess branches.
In order to compete with these digital companies, bankers at megabanks and regional banks are also being asked to be digitally specialized and creative.
Generalists have no value,” they say, “Everyone must become a specialist. The leaders of megabanks are all saying that “generalists are worthless; everyone should become a specialist” and “employees who have been engaged in relatively simple tasks should be reassigned to more creative work.
This is a major shift in personnel and organizational policies for banks and bankers, who have intentionally trained generalists who have experienced a variety of workplaces, including headquarters and branches, through repeated transfers within two to three years under the unspoken rules of seniority and lifetime employment. Many bankers, who have worked as generalists consistently since they started their careers with an emphasis on stability, have complained that they are now being asked for consulting and IT skills.
A kind of “power harassment”!
An analyst at a foreign securities firm who hails from a megabank says, “Banks are putting surplus personnel, generated by the reduction in workload associated with digitization, into the sales frontlines to strengthen their consulting operations. However, for example, can bank employees who have been in clerical work, back office, or headquarters suddenly be put on the front lines of sales and be active in consulting work, which requires expertise and customer consideration? And does he or she want to do so?
Bankers who have been working as generalists with an emphasis on stability are suddenly being assigned to workplaces and positions that require consulting skills, IT skills, and even creativity, which is harsh and could be considered a form of power harassment.
Many banks have luxurious training facilities and offer extensive in-house training, but the more creative the position, the greater the importance of experience and sense, rather than training and qualifications.
Bankers are also changing jobs from bank employees to civil servants.
Under these circumstances, megabanks and regional banks are experiencing a wave of job turnover as people give up on banking. The number of job classifications ranges from sales and marketing, product planning, private bankers, analysts, and other specialists. The number is not limited to those in their 20s and 30s, but also extends to those in their 40s,” said a person in charge of a website for job-hunting. In fact, a quick search on a smartphone for the words “banker, job change” turns up an endless number of websites offering advice and even video testimonials.
In the past, bankers who changed jobs or retired from their jobs, except for taking over the family business, were mostly likely to leave the bank for securities firms or foreign financial companies. The trend is to launch a start-up or venture company, become independent, or move to a consulting or IT firm, but “this is only a small percentage of cases,” according to the same banker.
What is surprising is that, for example, more and more megabanks are changing jobs to government-affiliated financial institutions and public offices, and regional banks are changing jobs to local governments such as prefectural and city halls, JA Bank Group, and government-affiliated financial institutions. In the case of government and municipal offices, this means that young people in their 20s can pass the general civil service examination, while those in their 30s and older can be hired after passing the quota for hiring people with work experience, etc.
Young people who choose banking are only conservative. They are also choosing more conservative job opportunities. They are looking for more stability and conservatism. Certainly, even if banks disappear, prefectural and city governments, JA Bank, and government-affiliated financial institutions will not disappear in the future.
Why work for a megabank and not Google?
While more and more people are retiring or changing jobs at banks, as long as digitization continues, banks will need digital talent as well. New smartphone apps and systems have been introduced, but only a few bank employees understand how they work and can update them. In the end, they are left to the system vendors and digital companies they work with, and the system becomes a black box. In order to avoid the same black-boxing that is said to be a remote cause of the series of system failures at Mizuho FG, it is essential for the company to have its own digital human resources.
Digital human resources include, of course, system developers, but also cloud, big data, AI, and cyber security specialists, data scientists, financial engineering and statistics experts, and digital product designers such as app developers.
In fact, SMBC has established a “digitalization course” in its career-track positions for domestic and international postgraduates, and is looking for people who can build advanced businesses using big data, AI, and other technologies. In addition, MUFG is continuously hiring mid-career professionals for positions such as data scientists, data architects, and cybersecurity experts.
However, unless “why a megabank and not Google or Apple” and “why a bank and not a start-up” are resolved, recruitment is likely to be a struggle. Among the many options available to digital talents, few will bother to join a bank that is inferior in terms of digital support.
In order to attract digital talent, banks will need to be flexible in terms of compensation, authority over work, work schedules, hours of work, approval of side hustles and dual employment, benefits, and so on.
Early retirement programs are already in place.
In addition to a declining population and low interest rates, the banks are struggling with the advance of digitalization, which means that they will inevitably have to reduce their workforces. In fact, of the ¥6.5 trillion in expenses for all Japanese banks, ¥2.7 trillion, or 42.6%, was spent on personnel (as of the end of March 2022). Incidentally, personnel expenses account for only 16.9% of the operating expenses of Daiwa Next Bank, one of the Internet banks (as of the end of March 2022).
Among megabanks, Mizuho FG will cut 19,000 employees by the end of FY2026. Mitsubishi UFJ Bank expects a natural decrease of about 6,000 employees by the end of FY2023. Many banks are also continuing to curtail the hiring of new graduates.
However, it is likely that such curbs on new graduates and natural attrition, such as mandatory retirement, will not be enough to cope with this situation, and that staff reductions in the name of early retirement programs will begin to take place. On the surface, the name of the program may sound positive, such as “second career support system,” “challenge career system,” or “support for entrepreneurship and independence,” but in essence, it is an early retirement system.
In fact, there is already a case in point: in June 2021, Chukyo Bank, headquartered in Nagoya City, announced that it was seeking applicants for voluntary retirement. The program is open to career-track employees 45 years of age or older, and 150 employees have agreed to retire by the end of March 2022. Chukyo Bank is merging with Aichi Bank to establish a joint holding company, Aichi FG, in October 2022.
According to the Japanese Bankers Association, the 271,515 bank employees nationwide, including megabanks and regional banks, have already decreased by 9,187 over the previous year (end of March 2022).
As banking operations are being replaced by other industries and bankers’ jobs are being replaced by smartphones, the day when traditional bankers will disappear may be drawing closer by the minute.
Text： Katsuhide Takahashi
Financial Consultant and Representative Director of Malibu Japan Co. After working at Mitsubishi Bank and Citigroup Securities, he established his own company in 2013. His publications include "Ginko Zero Jidai" (Asahi Shimbun Publications), "Why Niseko Only Became a World Resort" (Kodansha +α Shinsho), and "Jibin Nissei" (The Extinction of Regional Banks) (Heibonsha).