Banking, finance, and taxes

Wave of the Future: JPMorgan Cuts More Workers

Douglas A. McIntyre

Published: January 29, 2020 6:15 am

Last Updated: January 30, 2020 10:33 am

JPMorgan Chase & Co. (NYSE: JPM) will cut hundreds of workers in its consumer businesses. It is supposed the decision was made largely because consumers access bank services online. More and more banks have made similar decisions. At some point, bank branches will look like chain drug stores and large retailers like Walmart, where transactions do not require humans.

Report after report about the future of robots and artificial intelligence say that millions of American workers could be replaced by technology. This is expected to be particularly true for lower-level retail employees. Banks have not publicly admitted that branches and the people who operate them are expensive, both in terms of real estate costs and worker compensation. Yet, as technology advances, it is difficult to see how branches will need many people, or any people at all, within a few short years.

Bank retail employees across the industry have to number in the tens of thousands. The Federal Reserve Bank of St. Louis recently reported that the bank branch count in the United States in 2017 was 31,175 and falling. S&P puts the number at over 81,000, although it includes savings banks, which may be why the figure is higher.

One of the unintended consequences of the technology replacement of people is the negative effect it may have on the national economy. The hundreds of people JPMorgan will fire is a very modest number. Broader industry reductions, and forecasts that the numbers will accelerate, mean the banking industry will be part of a movement that could have a national impact large enough even to lower gross domestic product.