The board of Bendigo Bank has become the latest to get on the AI tools and sharpen its redundancy pencil.
Unions are stretched thin resisting the inevitable wave of job cuts hitting all business sectors, and are left to valiantly condemn the AI productivity push.
The Financial Services Union hit back at Bendigo Bank’s move on Thursday, calling it “a dramatic and dangerous escalation in the fight to protect Australian jobs from being wiped out by AI”.
But banks have been near the forefront of those expanding the use of artificial intelligence to improve productivity and reduce costs, and the union movement is powerless to put that genie back in the bottle.
Technology companies have been first in line to reimagine – or defend – their businesses using AI. We have seen companies such as WiseTech and Atlassian cut swaths through their workforces, leaving customer service representatives and engineers adrift in the jobs market.
It has left workers in more vulnerable roles with levels of anxiety akin to lobsters in a tank outside the yum cha restaurant.
Some like the Commonwealth Bank have been quite open about the evolution of its adoption of AI, the effect on workforce numbers and the extent to which this increasingly embraced technology is reshaping how work is done.
But all four of the large banks have announced sizeable job cuts over the past year with many cloaked under the broader banner of technology without specifically calling out AI.
The banking sector is a huge user of technology, and the adoption of AI in some of its operations to trim costs represents low-hanging fruit.
While Bendigo Bank investors appreciate the improved outlook for costs – which in this case would amount to about $70 million – it will send a shudder through its workforce.
The bank is keeping mum on how large the redundancy headcount will be but the expected savings represent around 10 per cent of its staff costs.
So it wouldn’t be a big mathematical stretch to assume that as much as one-tenth of its workforce will be heading for the exit doors.
The bank describes the move to partner with two IT providers, Infosys and Genpact, as allowing its operating model to be more efficient. And it follows a deal it inked with Google last year.
Bringing in partners is the cost-effective and lower-risk way to overhaul its technology stack, given it doesn’t have the financial grunt of the big four banks to develop it in-house.
The Genpact agreement is also targeted towards stronger risk management, an issue that was highlighted last year when AUSTRAC began an investigation into money-laundering failings, and the Australian Prudential Regulation Authority imposed a capital penalty on the bank.
And as previously mentioned, the Bendigo Bank board won’t get any argument from its shareholders whose focus will be on reducing the cost to income ratio, and profit growth.
The combination of a strong set of quarterly numbers, including cash profit growth of 7.6 per cent and a strong improvement in lending, sent Bendigo’s share price up by almost 10 per cent.
Shareholders were unconcerned about the $85 million to $95 million upfront costs to undertake its technology transition.
The society ripple effect of the banking industry’s adoption of AI isn’t the problem, it’s what comes next when all major businesses move from the early stages of dipping their toes in the AI pool to adoption at scale.
The godfather of artificial intelligence, OpenAI’s chief executive Sam Altman, has already begun the mother of all public relations offensives to sell his recipe on how to deal with large-scale AI-driven job losses
This week, he released a blueprint for governments to mitigate the societal fallout from AI – one that acknowledges widespread labour redundancies and the potential for rogue AI systems capable of replicating themselves.
His thoughts range from the imposition of a super profit tax on AI (which he calls a robot tax) and the creation of a sovereign wealth fund to look after those without jobs.
It all sounds a bit extreme and dystopian.
But as the Financial Services Union said on Thursday: “The race to the bottom has well and truly started in Australia when it comes to AI adoption and offshoring, and Australians should be outraged by the failures of both business and government.
“We are now seeing in real time the disastrous consequences of a complete lack of AI regulation, and Australian workers are paying the ultimate price.”
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