Banks cut staff in investment-related roles, but keep sustainability- and tech-related roles in their ranks

Article by Jenna McNamee | Feb 21, 2023

The news: Bank layoffs haven’t cooled; more firms announced cuts this week. But there are roles that banks are still hiring for, roles that have evaded cuts altogether, and roles that are employing upskilling. We dig into what’s going on.

Where are the cuts?

Bloomberg reported that Bank of America is planning to reduce the size of its investment bank, with the move believed to affect roughly 200 employees globally. This isn’t surprising: The bank suffered from a slow dealmaking environment and saw its investment banking income fall 54% YoY.
Wealth management firm Betterment announced that it will terminate 28 employees and shut down its Philadelphia office. CEO Sarah Levy cited the uncertain economic outlook and record inflation levels as the reasons for the layoffs and closure, as the firm’s results are largely tied to market performance. The eliminated roles included jobs in marketing, sales, and engineering. As the company’s footprint shrinks, it will also sublease space in its New York-based headquarters.

Some firms still are hiring.

Investment management firm Fidelity said this week it’s planning to hire 4,000 employees by the middle of 2023. The new roles include positions in tech and customer service. This is the opposite of other major investment firms, including BlackRock, which let go of 500 employees earlier this year.

Is anyone safe?

One pocket of jobs within banking is being spared from the chopping block: roles pertaining to ESG. According to a Barclays study which combed through more than 200 million job postings, banks and asset managers continued to search for ESG specialists throughout 2022, outpacing every other sector. The finding aligns with what we reported in the middle of last year—banks are spending significant money to bring in climate- and sustainability-focused talent.

Who’s taking a different approach?

While sometimes it’s not feasible to bring on new talent during economic uncertainty, it’s not always necessary to cut jobs, either. U.S. Bank is taking a different approach to new talent than most other banks: It’s calling for employee volunteers to upskill more than 7,000 current employees on cloud technology over the next two years. The bank says the program is a cost-effective way to keep its employees engaged and provide them with ongoing career development that’s relevant to the industry.

Our take: Although layoffs are still occurring, these trends suggest that they’re geared more toward investment banking and areas that depend heavily on market performance. But when it comes to areas like tech, some financial institutions are trying their best to avoid making cuts, and are even adding headcount. We expect bank layoffs to remain focused on areas that will likely struggle this year—such as investment banking—but we see banks beginning to think optimistically about the future as economic indicators like unemployment, spending, and lending remain strong.