What's going on?
Royal Bank of Scotland (RBS) is cutting jobs in the part of the bank that serves big businesses and is scaling back its investment advice service for individuals in an attempt to decrease costs.
What does this mean?
A few things are going on here. For one, RBS is shifting some jobs to India (primarily so-called “back office” jobs). It’s also making over 200 investment advisers redundant. These are people that would typically offer RBS investment products to individuals like yourself. It coincides with a major report released by the UK government that outlines changes to how financial advice can be delivered to customers in the future. The changes make it easier for online-only tools to be used to provide some sort of guidance or advice.
Why should I care?
For you personally: The provision of financial advice is changing. In 2012, financial advisors were barred from selling investment products that charged clients, effectively, a commission (e.g. you would pay your “advisor” 1% per year for their advice and for them selling you a product). However, that made it unprofitable for advisors to serve clients that didn’t have a certain amount to invest (say, below £100,000) and created an “advice gap.” In order to tackle this “advice gap,” expect to see the mass market providers offering more digital-only options in the near future.
The bigger picture: Technology is revolutionizing finance – and London will need to adjust. Armies of “back office” bank workers are likely to be increasingly imperiled by technological improvements. While RBS has chosen to shift hundreds of such jobs to India, it’s important to note that the burgeoning technological efficiencies (like, perhaps, blockchain technology) will require fewer and fewer human workers – regardless of where they are based.