At about 10:30 p.m., trucks roll up to a facility in a quiet business park on the edge of Northampton, a town in central England best-known for shoemaking. They carry bank checks. About 1 million of them must be processed before dawn.
The men and women who staff the graveyard shift at Intelligent Processing Solutions (IPSL) know the days of shipping pieces of paper by trucks and planes are ending. Today, U.K. banks physically receive each check in a mammoth paper-shuffling exercise, but they’ll start accepting digital images next year. That will likely eliminate the need for as many as two-thirds of the jobs processing them, according to several people familiar with the situation.
U.S. banks started adopting digital check handling several years ago. As developed nations attempt to grapple with the impact on jobs from robotization, advances in technology could knock out the work of half the people in Britain’s financial-services industry within the next decade, former Barclays Chief Executive Officer Antony Jenkins said in a speech last year.
“Finance is one of the most skilled industries susceptible to automation,” say Carl Frey, an academic at the University of Oxford who’s studied technology’s impact on employment. “There tend to be fewer and fewer traders; ATMs have relieved bank tellers of some of their work; and you’re likely to see a lot fewer people processing checks in 10 years.”
For all the hype over blockchain and Apple Pay, the humble check, which dates to 13th-century Venice, still moves a lot of money. In Britain, almost 560 million checks accounted for £500 billion ($609 billion) in payments last year, according to the Cheque & Credit Clearing Co., an industry body. The checks would form a paper mountain the height of London’s Shard skyscraper. In the U.S., 18 billion paper and electronic checks with a total value of $26 trillion were paid in 2012, according to the most recent Federal Reserve survey.
IPSL, a joint venture among Barclays, HSBC, Lloyds Banking, and U.S. software company Unisys, handles about 80 percent of the checks used in the U.K. each year. It employs a staff of 1,800. Once checks are received at IPSL, they’re sorted according to which bank the money goes to. Then they’re scanned into a computer system. Titus Ajayi shoves as many as 1,800 checks each minute through the scanning machine, his ears protected from the low rattle by earbuds.
In another corner of the factory, Pam Allen sits in front of a computer screen tapping the number pad on her keyboard as many as 2,000 times per hour, correcting values misread by the scanning machine. Elsewhere, 25 examiners monitor screens, looking for telltale signs of check fraud. They catch fraud attempts worth about £150 million each year.
A little less than half of U.K. consumers sent at least one paper check for payment in the 12 months ended in March 2015, says the clearing company. But check usage in the U.K. drops about 13 percent each year. “We’ve been managing a declining product for some time, so we know how to handle redundancies, and our staff know there are going to be some more radical changes ahead,” says Dave Watling, the client relationship director for IPSL.
Even as paper payments trail off, the Northampton site will still process a flood of digital images. They’ll be taken by consumers on smartphones, while banks plan to scan checks at branches and provide businesses with the technology to do so themselves. Reducing the number of people handling checks is just one way banks are seeking to lower operating costs as record-low interest rates crimp income on lending. Banks including HSBC and Royal Bank of Scotland are eliminating tens of thousands of employees in such areas as call centers, IT operations, and retail banks.
“The automation agenda is very much now upon us,” says Scott Vincent, managing director of consulting firm Parker Fitzgerald. Becoming more efficient is the only way, he says, “to get back to any respectable return on equity” for shareholders. The cost of that is being borne by the back-office workers.
The bottom line: It’s not only manufacturing workers who are vulnerable to automation. Financial sector employees are feeling it, too.