As the second wave of the COVID-19 pandemic rages in Nigeria with negative implications for the entire financial system, banks may soon begin to rationalise their operations through staff downsizing and branch closures in a bid to cope with the harsh realities, LEADERSHIP Sunday findings have revealed.
Checks by this paper the weekend showed that the banking sector is set for another round of rationalisation and cost cutting measures to ensure that they remain afloat.
Analysts said one of the measures banks would adopt would be to cut back on operating expenses.
In the wake of the pandemic last year, most banks had cut back on operational branches while some let go of staff members.
Although the mass retrenchment of bank staff had been stalled by a Central Bank of Nigeria (CBN) directive, banks had to resort to other cost cutting measures.
Reacting, the president, Association of Senior Staff of Banks, Insurance and other Financial Institutions (ASSBIFI), Oyinkan Olasanoye, in an interview with LEADERSHIP, said the association was yet to be officially informed about plans to downsize staff in banks, but that it was on the lookout and would react as soon as such idea was brought up. He said the association would not sit idle if such move is being planned.
Last year, 13 banks recorded a profit of N497.46 billion between January and September as against N470.76 billion which had been recorded in nine months of 2019.
According to analysts, banks' innovations in digital banking, increased agent banking network in the country as well as collaborations with financial technology companies will help close gaps in servicing customers.
The head of Financial Institutions at Augusto and Co, Ayokunle Olubunmi, noted that banks would focus more on reducing non personnel costs and relying more on digital channels and renewable energy as cost cutting measures.
He said, "With regard to laying off of staff, if banks are going to do it, it is going to be as minimal as possible. If you recall there is a CBN directive saying that banks should not lay off and during the recession in 2016, the CBN's approval was required before you could lay off staff more than a particular number. Part of the CBN objective is economic growth so even if some banks are going to lay off staff, it is not going to be significant.
"Banks will restructure because at the end of the pandemic some things have changed forever, some banks have been able to use work at home effectively. So for those kinds of banks, they may not need the number of offices that they have.
"Also, more customers are embracing the digital channels; so what we will see is that banks will look at more ways to manage their costs in terms of premises. Asides, there are increased talks of renewable energy, so banks will also be looking at fuel consumption".
In recent times, banks in the country have been cutting down on the number of staff, relying more on casual workers and outsourcing.
Data provided by the National Bureau of Statistics showed that the number of staff of deposit money banks in the country had declined from 105,017 in the first quarter of 2019 to 95,888 by the end of September 2020. This is despite an increase in the number of staff employed by non interest banks.
However, with the economic headwinds expected to continue alongside a rising case of non-performing loans, analysts say they expect banks to rely more on technology.
Business Automation To Reduce Jobs
Meanwhile, a new study has revealed that automation of businesses is expected to reduce global jobs by 85 million as more businesses are set to rapidly digitise work processes while robot revolution is expected to create 97 million new jobs.
This was highlighted in the latest World Economic Forum Future of Jobs report. The third edition of the report which mapped the jobs and skills of the future, tracks the pace of change based on surveys of business leaders and human resource strategists from around the world.
The article on the jobs of tomorrow by Saadia Zahidi notes that the workforce is automating faster than expected, thus creating double disruption with the COVID-19 triggered recession, a situation that would displace 85 million jobs in the next five years.
To him, companies' adoption of technology will transform tasks, jobs, and skills by 2025. Some 43 percent of businesses surveyed indicated that they are set to reduce their workforce because of technology integration, 41 percent plan to expand their use of contractors for task-specialized work, and 34 percent plan to expand their workforce as a result of technology integration. Five years from now, employers will divide work between humans and machines roughly equally.
The increased adoption of technology and the robot revolution is also expected to create 97 million new jobs, according to the report.
"As the economy and job markets evolve, new roles will emerge across the care economy in technology fields (such as artificial intelligence--AI) and in content creation careers (such as social media management and content writing).