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Is Fintech putting half of all finance jobs under threat?
“We will see massive pressure on incumbent banks, which will struggle to implement new technologies at the same pace as their new rivals. That will make it increasingly challenging for them to deliver the returns and profitability that their shareholders demand. “Ultimately, those forces will compel large banks to significantly automate their business. I predict that the number of branches and people employed in the financial services sector may decline by as much as 50% over the next 10 years, and even in a less harsh scenario I expect a decline of at least 20%.”His prediction follows a report by the Financial Times that highlights a recent McKinsey study predicting technological competition will slice 60% of profits from non-mortgage retail lending -- such as credit cards and car loans -- over the next decade. But the FT does not blame fintech for the job cull, instead it looks to regulation. Fintech companies, it maintains, are essentially more competitive because they are able to shift the responsibility of traditional bank functions -- such as due diligence, filtering and vetting – on to third parties, or to an algorithm, much like Uber does with its taxi app platform. Unable to follow suit, traditional banks are burdened with the costs of the current regulatory environment. They have little choice but to cut labor costs.
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