Banks now prefer automation over upskilling, says KPMG Report

A new report by global advisory firm KPMG has revealed that banks across the world are prioritizing automation and digitization over up skilling their staff as they seek to cut costs and boost profits.

According to the report, 38% of banks are focusing on automating processes, while 37% are digitising key functions to improve profitability. In contrast, only 31% are considering investing in upskilling their workforce to meet new market demands.

“Most banks can cut costs by about 10% using automation or cost-cutting targets,” said Owen Lewis, KPMG’s Global Lead for Banking Cost Transformation. “But to cut costs by 20 to 30%, they will need major operational changes.”

The report found that 82% of banks plan to reduce their costs by at least 10% by 2030, with nearly a third aiming for cuts of over 20%. This will largely be driven by automation, artificial intelligence (AI), and improved workflows.

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In Kenya, major banks like KCB, Equity, and Co-op have already embraced digitisation, a trend that is expected to reshape hiring in the sector. Traditional roles such as bank tellers and call centre agents face the highest risk of being phased out, while demand is growing for experts in technology, data analytics, and cybersecurity.

A recent report by the Central Bank of Kenya supports this trend. It shows that clerical jobs in the banking sector dropped by 5.5% in the year ending December 2024 due to AI adoption. However, other roles grew during the same period — with management, supervisory, and secretarial positions increasing by 938, 368, and 314, respectively.

The KPMG report, however cautions that while automation may bring quick savings, ignoring staff development could create long-term skill gaps. “Focusing only on automation could leave banks without the talent needed to maintain these changes,” the study warned.

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KPMG Partner for Financial Services Jörg Fehrenbacher, said that banks are focusing heavily on optimising customer-facing processes. “Cost savings are being achieved by reducing the cost to serve customers and cutting acquisition costs. Many transformation efforts are now centred around the customer experience,” he said.

KPMG East Africa Partner and Head of the Banking Sector Joseph Kariuki added that strong leadership is key to success. “Banks with clear strategies and centralised decision-making structures are seeing the best results,” he said. “It’s important to align cost goals with digital transformation plans.”

The report concludes that banks that strike a balance between automation, customer needs, and workforce development will be best positioned for long-term success.

By Obegi Malack

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