Israeli Banks Supervisor Says Tech Making Employees ‘Superfluous’

The Israeli banking system is getting rid of employees as fast as it can, according to Supervisor of Banks Hedva Ber.

“Globally, assessments are that by 2025, technology will replace a large proportion of the banking workforce. Even now there are areas of banking where technology has rendered many employees superfluous,” she proclaimed in a report published on Wednesday.

The number of jobs in the banking sector fell by 1,300 last year, and by nearly 3,200 in 2015-2017, the report said.

“The efficiency ratio in banks is improving. Particularly noticeable is the improvement in medium-sized banks that suffered from inefficiency for many years, such as Israel Discount Bank,” the report stated.

However, the banks aren’t efficient enough yet. The efficiency ratio of banks in Israel remains lower than banks in other developed countries. The ratio was 66.1 percent in Israel in 2017, compared with 62.9 percent in developed countries (a lower ratio indicates greater efficiency).

Business considerations dictate more technology and fewer workers, according to Ber.

“The banks and bankers must continue to act to adjust their business models decisively and with a forward-looking vision,” she said. “Banks that implement the changes slowly and continue to operate along traditional methods will increase their risk of becoming uncompetitive and irrelevant in the not-too-distant future.”

Israeli banks have also continued the process of closing branches to save money. The total number of branches in the banking system fell by 25 this year, 2 percent, and is now 9 percent lower than the peak reached in 2012.