The UK banking sector has seen an exodus of personnel out of London to a number of Southeast Asian locales. A combination of rising labor costs and a dearth of profitability at leading lenders has necessitated the move, something even the biggest banks have been unable to avoid.
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This trend looks to continue into 2017 with HSBC being the latest lender to offshore jobs to Asia. The hardest hit jobs have been in the IT and back-office space, with some lenders such as Deutsche Bank seeing several tens of thousands part ways with their UK operations.
For its part, HSBC will be moving approximately 200 IT jobs to India, China, and Poland – this will also coincide with the closure of 62 branches in the UK and another 180 positions domestically. The closure of branches is also exacerbated by a trend towards digitalization, which banks have embraced more openly over the past two years.
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Cost Reduction Strategy
The latest cuts are part of HSBC’s previously announced cost reduction plan back in 2015, which portended 800 IT jobs lost in the UK – the strategy has been almost universally adopted to date with cheaper labor in Asia winning out as revenues have been disappointing shareholders of late.
Despite the branch closure in the UK, HSBC still maintains a network of over 625 branches in the country, though to date 117 have been closed since the new cost-cutting strategy began. An overall transition towards more ATMs is partly to blame, with approximately 97% of cash withdrawals being from ATMs.
Over the past five years the number of customers using branches at HSBC has also fallen by almost 40%, prompting the lender to fortify its investment in digital channels.
According to Francesca McDonagh, Head of Retail Banking and Wealth Management, UK and Europe at HSBC, in a statement on the transition: “The decision to close these branches ensures a more sustainable branch network for the future as we continue to invest in our digital platforms and our people. We will have fewer but better branches, with more empowered front line colleagues using a greater range of technology to support all our customers’ needs.”