Despite automation, banking to see big rise in hiring

Every year, around 12,000-15,000 people are recruited in PSBs in both clerical and officer positions

The financial services industry, more specifically banking, is expected to see a substantial rise in jobs in the next few years even as automation encroaches on most of its core activities.

Automation, chat bots and big data analytics programmes might take a toll on the sector in the next decade or so. But now, digital technology, together with physical labour, is scaling new heights in the banking sector. 

With financial exclusion being as high as 55-60 per cent of adult population, notwithstanding Prime Minister’s Jan Dhan push, banks will continue to hire — a number of well-trained people armed with cutting-edge digital technology but reaching out to harvest customers who can’t make use of these services on their own.  HR managers are bullish on the industry.

“Banking is the new IT industry in terms of employment generation,” says Ajay Shah, head of recruitment services at Teamlease, a manpower firm.  According to Shah, incremental hiring in private sector banks would increase 10-11 per cent in the next 12 months. HR does not count public sector banks, as these do not follow a linear recruitment path. Moreover, these banks are either overstaffed or understaffed.

Between 2010 and 2013, the government recruited 85,000 people in public sector banks. Every year, on an average, 12,000-15,000 people are recruited in public sector banks in both clerical and officer positions. The employment ratio is 1:1, which means for every one clerical position, there has to be one officer in the bank.  In 2016, public sector banks recruited about 9,000 probationary officers and about an equal number of clerks, according to the Institute of Banking Personnel Selection (IBPS), the agency that conducts common admission tests for such banks.

According to the Reserve Bank of India (RBI) data, as on March 31, 2016, the banking industry had 1.26 million employees. The private sector banks employed about 300,075 people, foreign banks had 25,214 and nationalised banks, including the State Bank group, had about 860,000 people.  These numbers have increased in 2016-17. HR managers expect a good rise in 2017-18 as well. Also, the banking industry is expected to grow at over 20 per cent for the next two-three years. 

Retail banking will be the key growth driver for banks, along with corporate credit, SME banking, cross-selling of other financial products and services like insurance, mutual funds, fee-based sources of income and technological upgrade, according to the Institute of Finance Banking and Insurance, a manpower training agency for the financial sector. Experts maintain that the stress would be on expansion of branches and financial inclusion.

The new normal

Even as HDFC Bank reduced its manpower by more than 10,000 in the last six months, HR managers and bankers take it as the new normal.

HDFC Bank’s Deputy Managing Director Paresh Sukthankar said the bank had decided not to replace those staff, as the lender witnessed a good traction in its digital transactions and therefore needed fewer people.  HR experts said HDFC Bank could be an outlier. Most other banks are bullish on hiring.  “If you look at any mid-sized private sector bank, the outlook for hiring is extremely positive for the next one year. Ten small banks and 78 fintech companies are on a hiring spree,” Shah said. 

A few banking service providers, such as payments bank licence holder PayTM, have ambitious plans in terms of hiring and business expansion as they start banking operations. 

The digital push has helped banks to expand business and penetrate rural areas, bankers said.  Some lenders, such as IDFC Bank, have been  hiring people to tap customers who still cannot use technology on their own. “Technology is very important but not in the way many people imagine,” said Rajiv Lall, head of IDFC Bank.  “Having a smart-app is not going to help me tap customers who don’t have a smartphone,” he added. Instead, the bank is hiring 3,000 as direct employees and a similar number by acquiring a microfinance firm in South India. Another entrant, Bandhan Bank, plans to ramp up its headcount to 30,000 in this financial year from 24,000 (including microfinance workers), Managing Director and CEO Chandra Shekhar Ghose said.

Shape of things to come

Getting an opportunity to interact with humans would be preserve of a few, says Stuart Milne, head of HSBC India.

“If I see banking technology of future, it’s likely a few wealthy customers will have access to a relationship manager, but most of us won’t. It will be a robot, algorithms in most way. Does it mean that it will be less good? I don’t think so. I think it’s actually better,” said Milne. 

Milne has a time horizon of 100 years in mind. That is some time away. For now, the banking industry would continue to absorb people as it reaches out to new clients waiting to get financially included.

 

Series concludes