By Lucas Baird
Bendigo and Adelaide Bank will cut its workforce after agreeing to two major technology deals, the latest in a string of job losses across the sector as banks trim down to better compete in a fiercely competitive market and as artificial intelligence threatens to make some roles redundant.
The redundancies are being made in Bendigo’s technology and business operations teams, but the regional lender declined to say how many positions would be cut because it was still consulting with affected workers.
The bank said the cuts would save the business at least $65 million year-on-year – about 10 per cent of its staff costs last financial year – by the 2028 financial year. Hundreds of roles are likely to be affected.
The cuts follow deals with Infosys and Genpact, which will outsource some of the bank’s technology and business management capability.
Infosys will provide software engineering and AI services under a seven-year agreement, while Genpact will “support stronger risk management across the bank” for the next six years after Bendigo and Adelaide ran into trouble with regulators last year over anti-money laundering failings.
The transactions will cost between $85 million and $95 million in the 2027 financial year, the bank said, and will follow a similar AI deal with Google last year, under which the technology giant’s Gemini software will be deployed across the organisation.
The latest cuts come on top of 158 redundancies Bendigo made in September as it and other regional lenders grapple with major cost and competitive pressures. In the four months to last November, Bendigo shed 3.6 per cent of its workforce
“The operational efficiencies delivered through this change will support our previous stated guidance of business-as-usual expenses to be no higher than inflation through the cycle,” Bendigo and Adelaide Bank chief executive Richard Fennell said on Thursday.
The cuts are the latest in a raft of job losses across the industry, as banks strive to strip out costs wherever they can in a fiercely competitive market, especially for mortgages and in business banking.
National Australia Bank cut 170 business banking jobs last month, but ANZ has led the cull over the past 18 months with 3500 redundancies announced by chief executive Nuno Matos last year.
Westpac announced 1500 job cuts last year, although the lender has ramped up hiring in other areas, including raiding Commonwealth Bank’s talent pool, particularly in artificial intelligence. And, in February, CBA notified the union of plans to cut 300 positions across its retail, business, and institutional banking units, as well as in human resources.
Finance Sector Union national secretary Julia Angrisano said banks were “racing to the bottom” on AI adoption and offshoring, and called for more regulation of AI in the workplace.
“The fact that Bendigo Bank cannot say how many jobs will be impacted inspires zero confidence that management understands the full ramifications of what they are doing,” she said.
“The federal government has also demonstrated incredible naivety when it comes to its light-touch approach to regulating AI … unfortunately, the federal government has been asleep at the wheel.”
Wilson Asset Management portfolio manager Anna Milne said it was an unfortunate reality that regional banks had to cut costs to generate an adequate return on investment for investors.
“For the last few years, the banks have faced significant cost pressure,” she said. “Since the royal commission, you have higher regulatory costs, higher staffing and wage costs, and then you add in IT costs – put it all together, and you have a sector whose cost profile is under a lot of pressure.”
While big banks like CBA and Westpac could afford to try to cut software spending and design in-house AI tools, she said smaller competitors didn’t have the scale or skills for that option.
Runs on the board
Milne acknowledged the sensitivity around a regional employer making significant job cuts, but said the deals with Infosys and Genpact were a “step in the right direction” given that investors are sceptical the bank can meet its goal of lifting its return on equity from 7.1 per cent to 10 per cent by 2030.
“Bendigo needs to get some positive runs on the board to earn back investor trust,” Milne said. “The quarterly trends reported today appear strong, but we need to see more execution,” she added.
Bendigo also said its after-tax profit for the March quarter was down slightly on last year at $109.4 million.
Shares in the company were up nearly 9 per cent at $11.39 by early afternoon trading on Thursday.
The bank’s cash profit, which is more closely watched by analysts and investors, was up nearly 13 per cent to $137.9 million in the third quarter, while its net interest margin rose 6 basis points to 1.98 per cent after it booked the benefits of two interest rate increases from the Reserve Bank.
However, Bendigo also said there were “emerging headwinds” to lending growth coming from higher funding costs.
UBS analyst John Storey said the update from the bank was strong and that the deals were a “positive, as regional players need to focus on tech partnerships to compensate against scale headwinds”.
JPMorgan analyst Andrew Triggs said the update would likely trigger upgrades to profit forecasts for the company.
The bank flagged it had taken a $2.1 million credit expense in the three months to March and said it would “continue to monitor geopolitical developments and potential impacts on credit risk”.
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