Banking jobs are under threat by blockchain technology. That’s simply a fact of life. When car manufacturers find that aluminum is cheaper, lighter, and easier to work with than steel – they make trucks using aluminum. No more steel. It has been replaced.
Existing currencies are dependent on infrastructures built by the financial industry. The dollar is only effective as a medium of exchange because banks, governments, and institutions created the structures and facilities necessary so it can be used seamlessly in the real world.
The problem with these existing infrastructures is that they’re expensive, unwieldy, and tied to legacy systems dating back decades. Furthermore, there are also inconsistencies with each system since each organization has a different approach to handle money.
What Does This Mean For Banking Jobs?
In the first quarter of 2018, global banking giant Deutsche Bank posted net profits of $146M. The bank has 97,000 employees, meaning each one was responsible for $1,505 in revenue.
In the same quarter, Binance posted profits of around $200M, with an estimated 200 employees. That’s easy math – $1M each.
It doesn’t take a genius to figure out that banks are going to be looking carefully at blockchain, and that banking jobs could be on the block (so to speak) if the major banks look to streamline their business models by incorporating this new technology.
Who’s in? JPMorganChase has their own blockchain unit. IBM’s HyperLedger Fabric division can count the aforementioned Deutsche Bank and HSBC among those looking at it. Barclays and Credit Suisse are considering the Utility Settlement Coin. The R3 group includes Bank of America and Merrill Lynch.
Blockchain is here to stay. And that’s bad news for banking jobs.
Professions In Financial Services That Stand To Lose
Our existing financial system only works because it’s tethered to the infrastructures you see today. Existing banks and financial service providers, therefore, have a whole host of infrastructures to maintain operations.
Companies will begin to cut multiple departments in the banking and financial services industry. With the blockchain network able to accurately track the movement of funds, professionals dealing with disputes, failure of transactions and assisting customers with transactions will be made obsolete.
We won’t need fraud and risk analysts, wire specialists, even banks tellers and clerks.
We won’t need “Our Mr. Lewis:, to sit down and analyze your credit score before talking over a loan. Not if your credit data is where it belongs – under your control, on the blockchain.
The blockchain will replace the value of these jobs. Although fraud and risk will always be a concern, they will be monitored through software.
And what about the industry around physical cash? Blockchain could be responsible for eliminating professions that manage cash like vault manufacturing, ATMs, armored transportation…
It’s Just The Internet, All Over Again
The Spinning Jenny put England’s textile workers out of a job. Globalization meant U.S. manufacturing become uncompetitive, and put millions out of work. The Internet 2.0 changed the world – millions of jobs disappeared, and reappeared in new ways.
The cycle of innovation never ceases, and each go-round has casualties and opportunities. There are millions of people working in web development, social media management, app design… millions of freelancers working remotely and (hopefully) taking a small amount of pressure off the city highways… millions of people doing what they do today because of innovation.
Cryptocurrencies will, without a doubt, reinvent and restructure our existing economy if banks adopt blockchain. And banking stuff will need to start seriously thinking about how transferable their skillset is.
History suggests that once the benefit of new technology is recognized, there is no going back. If firms fail to adopt the new technologies due to their attachment to existing employees (which may be considered dubious), they will be driven out of business by more agile, lean and faster competitors.
While blockchain will change the way we trust and trade for the better, it’s nevertheless going to leave a dent in the market for banking jobs.
Adam Selene contributed to this article.