“Do you take credit cards?”
When did you last hear someone say that? If I had to guess, for most people, perhaps 2 or 3 years ago. Perhaps at a cafe, in a taxi?
But it is unbelievably rare now.
Taking Bermuda, where I live, as an example. Bermuda’s oldest bank, The Bank of N.T. Butterfield & Son Limited, announced two weeks ago that it had to take the unfortunate action of allowing 30 employees to take early retirement, making 11 employees redundant and closing retail banking services (“walk-in’s”) and drive-thru teller services at one of its branches.
Fintech is the overriding catalyst behind the job cuts. “Walk-up and drive-thru ATMs will remain in place” according to the press release, which also emphasized the Bank adopting a “more automated back office environment.”
First, the “tech” part: technology. People still bank using ATMs (a technology which will celebrate its 50th year anniversary this year) but have increasingly moved online. The growth of online banking is leading to the death of [physical] retail banking. People generally don’t use traditional retail banking services, let alone drive-thru banking any more. Those services that might, you know, involve people.
I just haven’t used a bank teller for… I can’t remember how long.
And the “Fin” part — a bank is like any company, and although there are examples of socially responsible companies, most simply are firmly focused on one thing: return to shareholders. As painful as it may be for staff, closures of branches and employee cuts are required to make them leaner and more profitable. In order to compete with other banks and financial institutions, their focus has shifted to creating easier, more flexible online banking services for their consumers.
There has been a lot of debate over what can or should be done regarding those individuals who have lost their jobs or taken early retirement. One of the frequent questions: “who will be next”?
The initial statement from Bermuda’s Premier Burt: “the Government will increase our efforts to diversify our banking sector as a matter of national priority.” Diversification must in part allude to Bermuda’s development of crypto banking and digital asset businesses.
Both the Island’s new Digital Asset Business Act 2018 and the amendments to The Banks and Deposit Companies Act 1999 (which accommodates crypto banks to form on the Island) will result in the formation of new licensed entities which will have to have a physical presence in Bermuda and should provide some employment opportunities. Crypto banking and digital asset financing will also develop in Bermuda over time.
It is up to the companies themselves within financial sectors to adapt to the new technological pressures that a disruptive, Fintech driven environment creates.
New skill sets can be developed. Retooling and transitioning from traditional banking to Fintech technology can happen but it won’t be easy.
Employees within the existing banks and financial institutions may be able to take advantage of the new opportunities to work in Fintech related areas which are new and exciting, so long as there is a willingness to learn and adapt. These companies can try to re-skill their existing employees, or at least give them the opportunity to work in other, more viable areas within the organization itself.
Potential jobs with “cyber”, “tech” or “data” in their titles may be attractive to those for looking for future employment opportunities, particularly in the cybersecurity sector.
Of course, in addition to the pure financial aspects of Fintech, the increase of automation, artificial intelligence and machine learning are also becoming bigger factors. So is the use of chatbots. As machine learning increases in sophistication, human financial advisors are also being replaced by robo-advisors.
So what, realistically, can Bermuda’s Government do to help protect jobs in the financial sector?
Bermuda’s digital asset businesses and crypto banking are being encouraged. The amendments to Bermuda’s Insurance Act to attract new Insurtech companies forming is also helpful, as many new Fintech companies, outside of finance, are in the Insurtech sector.
So, “diversification” will occur. Everything can and will be done to speed up that process. From Bermuda’s perspective, being a leader in the digital asset business sector and a creative force in the crypto banking sector will not just create jobs; the hope is that it will make the Island an innovative, global jurisdiction.
But the reality is: when looking at the disruption Fintech may cause at this current time …. it is really just an impossible question to answer in the short term. It is an impossible question to ask anywhere.
We have an uncertain future full of disruption but one also full of technological efficiency, advancement and promise…. advancement and promise for those who are willing to embrace the possibilities which Fintech may bring.
But those within the traditional financial sector will be under the most pressure to adapt because this kind of disruptive change will hurt. It will hurt those entities who are slow to move and regrettably it will hurt a number of people as a result, no matter what.
This is a disruptive digital revolution which you cannot stop. But you can prepare for it.