Standard Chartered already cut 88% of one team, but these jobs look safe
AI is coming for 20,000 jobs at HSBC and now it is also coming for around 8,000 at Standard Chartered. At an investor event in Asia, Standard Chartered declared that it intends to cut 15% of jobs in its corporate functions by 2030, aided by automation. The Financial Times notes that this means 8,000 people.
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While corporate function jobs at Standard Chartered are due to disappear in the next four years, there are pockets where a more complete kind of decimation happened already. In its 'transformation presentation' yesterday, Standard Chartered declared that AI has already enabled an "88% reduction in monitoring manpower" via a "central observability platform." Almost everyone who was monitoring its processes has therefore gone.
It's not all bad news. People in corporate functions are in jeopardy and people in monitoring roles have been done away with, but some people at Standard Chartered have a promising future.
These people are in Standard Chartered's global markets business and interface with financial institutions clients like banks, broker dealers, fintech firms, hedge funds and asset managers. Much as Citi has decided that it wants to increase its market share with hedge funds, Standard Chartered has decided that it wants to increase its market share with all these financial institutions.
Yesterday's CIB presentation explains why. Financial institutions clients generate higher returns on risk weighted assets than corporate clients, says Standard Chartered. While corporate clients generated returns of 6% last year, financial institutions clients generated returns of 8%. This matters in a world where Standard Chartered wants to achieve a return on tangible equity of 18% across the bank by 2030. If you work in prime broking, your job is probably safe.
Meanwhile, the 8,000 job cuts in the corporate functions look like the natural consequence of an evolutionary process. Standard Chartered explained how it first created a "horizontal shared platform" and moved its back office into "centralized hubs" (AKA "global capability centres"). It's now ready to build an "agile operating model" with fewer people, 20% higher productivity per person and a cost to income ratio of 57% instead of 63%.
Other banks have also followed this process. Other banks are likely to do the same thing. As the flood waters rise, prime broking relationships are the high ground.
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