While the headcount for front-office workers -- the bankers and traders historically seen as among the companies’ most valuable assets -- could drop by almost a third amid an automation push, remaining employees will be more highly rewarded, according to a McKinsey & Co. report released Thursday. Compensation costs could drop by as much as 20 percent, with savings potentially reaching $600 million a year, the consulting company said.
Forty percent of existing jobs at financial firms could be automated with current technology, McKinsey said. Trading, for example, “will continue to evolve from the factory floors of the past” to “select technology-focused staff.” And predictive analytics and increased customer reliance on digital channels will continue to pave the way for smaller, more client-focused teams of bankers, the report said.
“The really successful folks will be able to bring together the technical capabilities along with those traditional sales capabilities,” Matthew Steinert, one of the authors of the report, said in an interview.
McKinsey has long been predicting a major transformation to the finance industry from computer advancements. Banks are spending billions in the race to utilize the latest technologies in everything from capital markets to retail banking. JPMorgan Chase & Co., the biggest U.S. bank, sets aside more than $10 billion to spend on technology each year and has even gone so far as to call itself a technology company.