Standard Chartered and the human cost of digital survival

A reminder of the human cost of digital transformation today another major bank prepares to slash thousands of jobs as part of its “switch to digital’.

Multi-national bank Standard Chartered intends to axe 4,000 jobs, 2,000 go which have already been announced but are today joined by an equivalent number. The bank intends to speed up its closure of offline branches with the wider goal of reducing costs by £265 million a year.

A statement from the 150 year old bank states:

We are realigning staff and resources to meet the changing needs of our clients. Investing in better technology is a key element of our strategy which will see us moving quickly to adopt more digital and mobile channels that will allow our clients to enjoy easy and convenient banking solutions.

That backs up a commitment from Standard Chartered last year to:

Innovate, digitize and simplify in order to improve productivity and effectiveness…yo deliver positive jaws and keep investing for growth, simultaneously, we have to be delivering significant productivity improvements every year. That requires constant innovation, a bias towards digitising everything we can, and a relentless focus on simplifying and streamlining the way we work.

With the shift of digital identified as a core priority, it’s interesting to note that at the same time as the new cuts were revealed, it was announced that Standard Chartered’s CIO Jan Verplancke is to step down after a decade in post.

Peter Sands, group chief executive, said:

We are demonstrating action and progress as the management team focuses on delivering returns for shareholders. We are continuing to take significant action on costs by exiting or reconfiguring non-core and underperforming businesses, and by increasing the efficiency of our core businesses. We are well on track to deliver at least $400m of cost saves for 2015, and we are now focussing on achieving further cost savings for 2016 and beyond as we continue creating capacity to invest in the Group’s core businesses.

Sands has been one of the main drivers behind the digitization push, stating last year:

As a fundamentally digitisable industry, every aspect of banking can be transformed by technology. This is as much an opportunity as a threat. Through technology-driven innovation, we can empower our clients, cut costs and improve risk management, reinventing every aspect of the business. The trick is to make it happen to our advantage, rather than have it happen to us.

It’s the same trick that Lloyds Bank is trying to pull off with its plan to cut over 9,000 jobs –around 10% of its entire workforce – and close 150 branches as it spends over £1 billion in digital technology over the next three years

My take

A heavy price in human terms, but one that can’t be avoided after decades of failure to innovate across the banking sector as a whole.