Thursday, October 28, 2021

The Digitisation bite: 390 Jobs gone in the banking sector

The pace at which the banking industry is migrating from physical branches to technology-based service has once again raised the question of whether banking sector employees worldwide should worry about their jobs.

In Botswana, the sector has already parted ways with atleast 390 workers, and the finger points to Digitisation.

Minister responsible for Employment, Labour Productivity and Skills Development – Mpho Balopi, the country’s commercial banks single out digitisation as a major reason for reducing the number of employees. The banks have made it clear that digitalization and or automation of existing products and services has resulted in the reduction of manual work that requires physical presence of employees.

Labour markets data shared in Parliament this past week shows that so far only two commercial bankers – BancABC and First Capital Bank and the central have not sent workers home lately. A breakdown of the banking sector headcount shows that the First National Bank Botswana (FNBB) parted ways with 109, Absa Bank Botswana (111), Standard Chartered Bank Botswana (83), Bank Gaborone and BBS both with 22, Stanbic Bank (16) Botswana Savings Bank (12) and Bank of Baroda (9) employees.

Balopi said a total of 151 employees left the employment through voluntary separation or mutual separation agreement. He added that the rest of the employees (239) left employment through the normal course of business such as resignations, end of contract and retirement.

The latest banking sector employment data comes at a time when an insight report compiled by Deloitte International made a suggestion that commercial leaders should now stay on top of customer experience, core technology, robotics and cognitive automation solutions, and powerful emerging forces like blockchain.

The international human resources company says unlike other concerns, workplace and workforce transformation does not come with a champion in place. Deloitte also opines in the same report that digital transformation strategies, many of which will have accelerated because of Covid-19 will define the modern financial spaces ways of working and service.

Despite the ongoing changes, the country’s banking sector continues to be resilient, raking in profits. Early sectoral data shows that for the first five months of 2021 there was a strong performance, with net after tax profit registering P828.7 million, higher than P660.4 million in the same period last year.

The rise in profitability this year is aided in part by low base effect after performance was suppressed last year against the background of loan repayment moratoria and restructuring to support customers adversely affected by the impact of Covid-19.

“Notwithstanding the negative effects of Covid-19 on the banking-industry business, the asset quality for banks improved, resulting in a decrease in the ratio of non-performing loans (NPLs) to gross loans and advances from 4.8 percent in December 2019 to 4.3 percent in December 2020.,” the central bank noted in its recently released annual report for 2020.

The net after-tax profit from the commercial banks declined by 17.5 percent from P1.8 billion in December 2019 to P1.5 billion in December 2020, largely reflecting the depressed business activity from the COVID-19 pandemic. In 2019, the banks hit their highest profitability, delivering about P2 billion in after tax earnings.

Total banking assets increased by 4.6 percent from P98.7 billion in December 2019 to P103.3 billion in December 2020. Loans and advances, which comprised 63.5 percent of assets, rose by 4.4 percent to P65.6 billion in December 2020 compared to P62.8 billion in December 2019. With regard to liabilities, customer deposits increased by 6.4 percent from P75.7 billion to P80.5 billion.

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