eBusiness Weekly
Kudzanai Sharara Taking Stock
If there is one thing that is as clear as day and that we all agree on is that we are in the midst of a digital economic revolution. What we can disagree on is how the new technologies are changing the economy and whether the changes are deep.
Let’s take banking for example. The prominence of electronic banking, aided by the acute shortage of cash has many people worried that jobs in the banking sector are under threat. The prevailing trends do back up the concerns too. Many banks are opting to embrace and invest in technology and focus on online and mobile banking.
The expected loss of jobs and less remuneration to banking employees does not seem to be the case though. It appears that banking employees are still getting a bit more than thought. With the changes and developments mentioned above, one would have thought total earnings for banking employees would be going down as some lose their jobs and some get redundant. But contrary to the belief that banks are laying off workers as business slows and cash shortages become more pronounced, the share on their income to total income is actually growing.
A closer look at the interim results, for ZSE-listed companies, for the period to June 30, 2017 shows that employees got a much bigger share of the bank’s total income. Banks such as NMB, FBC, ZBFH, and Getbucks saw employees get a bigger share of income that they got prior year comparative as shown on the table. CBZ and Barclays, however, saw employees getting a lesser share than prior year comparative.
There was even growth for staff costs at most banks with the exception of CBZ Bank where there was a decline in staff costs by 13,7 percent to $20,1 million from $23,3 million prior year comparative.
GetBucks Micro-finance Bank Limited recorded the biggest jump in staff costs of 36,9 percent to $1,8 million although the figure also included directors’ remuneration. The growth in Getbucks’ staff costs, however, comes at a time the financial institution was on an expansion drive following its licensing as a deposit taking micro-finance bank. The new business model, meant engaging more employees, and as a result the increase in staff costs was to be expected.
But there were also significant increases in costs at other banks with staff costs at FBC increasing by 10,8 percent to $7,3 million. This was even much higher at ZB Bank where staff costs were up by 14,7 percent to $7,3 million.
The growth in staff costs was also much pronounced at Steward Bank where results for the six months to August 31, 2017 showed staff costs having gone up by 23,6 percent to $4,5 million from $3,6 million prior year comparative. For Steward Bank the share of staff costs to total income was however much lower than prior year at approximately 16 percent down from approximately 24 percent.
Most banks are expected to increase the use of technology to automate their operations, forcing many employees to adapt or find new positions. Globally it is forecast that developments in technology could cut the number of banking jobs by 30 percent in the next few years. However, some industry experts have also warned against overreacting to the impact of technology on jobs.
JPMorgan chief executive Jamie Dimon cautioned that while the banks are using technology to reduce costs, the developments also helps create other opportunities. He predicted that employee numbers at his firm will continue to rise — as it hires more technology workers.
Bankers Association of Zimbabwe (BAZ) president Dr Charity Jinya has also ruled out wholesale job losses in the banking sector despite increased use of technology. Speaking last month, Dr Jinya said banks are continually re-modelling their businesses around new technologies and innovations.
“It is conceivable therefore that the wide spread adoption of more efficient ICT technologies will in future necessitate the realignment of staffing levels.
“However, in the short-term, staff cut backs are not usually adopted as a solution as it is more optimal for banks to retrain and reassign staff to other roles in a manner that increases service quality and convenience for the banking public,” said Dr Jinya early October.
Dr Jinya said the increased use of e-banking platforms by depositors is accompanied by a greater need for call centres which employ human resources and improve service quality.
Financial experts also believe that technology actually help decrease redundancies, speed up processes and make life easier for employees.
“Instead of replacing employees, banks can simply reuse them. They can be trained in new areas, given more oversight and spend more time with the customer.”
As technology and electronic transactions continue to spread across financial services, banks should focus on ways to capitalise on it, not run from it. There are also chances that the pay for tellers will rise as banks seek to engage high-tech workers, including computer programmers who can help trouble¬shoot technology, to its ranks.
