Bank jobs fall for first time in 14 years after services go tech
Commercial banks shed 711 jobs last year due to increased use of technology in customer service. PHOTO | FILE
What you need to know:
Equity Bank attributed the job losses to “natural attrition”, a consequence of its decision to freeze staff recruitment three years ago as it shifted towards the agency banking model.
Commercial banks shed 711 jobs last year due to increased use of technology in customer service, marking the first time employment in the industry fell since 2002.
The Central Bank of Kenya (CBK), in the 2015 annual supervision report, said the number of those employed by the banks fell to 36,212 by the end of last year from 36,923 in 2014.
With the fall in staff numbers, the number of customers per employee rose by 26 per cent, meaning that the lenders were able to extract more from labour. “On average, in 2014, one employee was serving 770 customers whereas in 2015 an employee was serving 972 customers.
This shows increased efficiency in customer service as a result of banks embracing technology,” said the CBK in the banking sector survey report.
Banks have been turning to cost management in order to improve their profit margins, increasingly pushing customers to alternative banking channels such as agency and mobile banking as a means of reducing their personnel costs.
The top 10 banks in Kenya, which collectively control 72 per cent of the market and 88.2 per cent of the 35.2 million deposit accounts, collectively cut 518 jobs last year, according to their respective annual reports.
The fall in staff numbers were in Equity Bank, Cooperative Bank, Barclays Kenya and Standard Chartered, while KCB, CBA, DTB, CfC Stanbic, NIC Bank and I&M Bank all increased their number of employees, although at a slower rate than their top counterparts cut theirs.
Equity cut the most jobs during the year at 647, followed by Cooperative Bank at 502. StanChart and Barclays reduced their workforce by 167 and 40 respectively.
Equity Bank
Equity Bank attributed the job losses to “natural attrition”, a consequence of its decision to freeze staff recruitment three years ago as it shifted towards the agency banking model.
Cooperative Bank has also been looking to shift customers towards the alternative banking channels, and last year started stationing agents inside its branches hoping to eventually woo customers from banking halls.
“The number of transactions happening in branches have now declined by over 33 per cent while Mco-op cash, agent and Internet banking transactions have increased by 65 per cent, 46 per cent and 297 per cent respectively,” said Cooperative in its 2015 annual report.
StanChart’s job cut was initiated by its parent company in London, Standard Chartered Plc, which has said it will eliminate 15,000 jobs worldwide by 2018. As a result of the job cuts, the banks were able to reduce the contribution of employee costs to total expenses from 27.2 per cent in 2014 to 24 per cent last year, in spite of the actual staff costs increasing by Sh2.2 billion.
This means that their spending on staff is growing at a slower pace than other operating costs.
Although banks have been able to fall back on technology to cut down staff numbers and costs in their Kenyan operations, they have continued to hire more people in their regional subsidiaries. “The subsidiaries had a total of 5,952 employees compared to 5,759 the previous year.
Uganda had the highest number of employees at 38.3 per cent mainly as a result of the largest number of branches of subsidiaries located there,” said the CBK.
The CBK however warns that the increased use of technology to replace manual processes has brought an increase in cases of ICT-related fraud in the sector.
