RBS is automating – but what about those not yet online?

Customers of the Royal Bank of Scotland, including its NatWest arm, could be forgiven for thinking that soon there will be no more branches of their bank left. The most recent closure amounts to about a quarter of the remaining branch network, and represents about 680 (according to the company) or 1,000 (according to the Unite union) job losses.

As an overwhelmingly state-owned enterprise, RBS finds itself in a difficult position. Its public-service obligations might be thought to be more pressing on its board than they are in its private-sector competitors, but this appears not to be the case, either regarding the branch network or more socially useful lending policies, for example. RBS is, it seems, being encouraged to behave in a properly commercial fashion, with a view to its being returned to the private sector after a decade in public ownership. It was supposed to do so some years ago, as Lloyds successfully returned to private hands. Failure to do so would, it is fair to agree, leave RBS more or less permanently in the public domain, and the arguments for a British state-owned clearing bank are certainly mixed.

Even so, RBS might have paid more heed to the reliance many of its older customers have on the branch network, particularly in rural Scotland, and how they are supposed to cope with online banking when they are not connected to the web, or telephone banking when they aren’t familiar with it and, rightly, are wary about how fraud-proof any of these are.

Perhaps a postal service as well as mobile bank branches would be an answer to some of these problems, as would a pooling of the town and country branch networks of the banks and the Post Office. Even if it is difficult to justify a branch staying open with just a few visitors a week, a more determined effort to make rationalisation work across these organisations locally might save some services and jobs.

The fundamental force driving this continuing turmoil in domestic banking is a radical change in consumer habits, as they abandon cheques and savings books in favour of accessing real-time information and making transactions at any time via their smartphones. Hence the move towards this particular form of automation, which is, in its way driving up productivity, at the cost of job losses and dislocation in the short run.

As the Budget recently highlighted, if anything Britain has had not enough automation rather than too much, judging by the collapse in productivity growth since the financial crisis. In the long run, no economy can support rising real-terms wages and living standards if it cannot back them with an increase in production and productivity, and automation usually delivers just that. Investment in the new technologies and in public infrastructure is essential to this, and it makes sense to so when the economy, even in its present feeble state, is likely to grow at a faster pace than the interest rate.

Every industrial revolution in history has destroyed and created jobs and triggered anxiety. The general lesson is that new trades replace old, and the reductions in costs that investment and technology deliver lift the real purchasing power of wages across economies, to the benefit of all. We no longer have many printers engaged in “hot metal”; we do have more software engineers in work that is just as well-paid as the old crafts. Robots have long since replaced people assembling and painting cars, and vehicles are more cheaper in real terms, reliable and durable as a result. Dangerous industrial work has tended to disappear as economies evolve, so there are fewer widows and orphans from mining and farm accidents.

Such has been the consistent pattern of dynamic change over the centuries, including the internet revolution, which transformed the productivity of almost every industry (and which may now be facing the law of diminishing returns, a seeming constant in economic life). As the rise of Uber and social media demonstrate, and as we witness the first crash-prone experiments with autonomous vehicles, the possibilities of the electronic and digital technologies are far from exhausted.

The advent of artificial intelligence, though, may prove to be an even more disruptive technology – and an unmanageable one – than previous waves of innovation. For if future leaps forward in software development increasingly depend on not so much on human ingenuity but that of machines, then that process could grow exponentially, and with quite unimaginable effects. Without straying too far into the realms of science fiction, this could at last herald the arrival of the “leisure society” that has proved so chimerical in past decades. In the Britain of the 1970s, for example, a rise in unemployment because of an inefficient and failing economy was fatally mistaken for the effects of technological progress.

This time round it could be different – and in a world where fewer citizens need to work to enjoy a comfortable living, they will need to find some other purpose in life – potentially breaking the link between work and survival, a first for human existence. Some might dream of the creation of a post-capitalist, if not socialist, society where much of the rat race has been abolished and a “citizen’s income” is deemed the most rational way to distribute the proceeds of the leisure society among the members of the “hive”.

Last week, a report from the McKinsey Global Institute posited that up to 800 million workers globally will lose their jobs by 2030 and be replaced by robotic automation. This study of 46 countries and 800 occupations suggested that a fifth of the world’s workers will be affected. Of course, that may prove as fanciful as some of the other flawed futurologies we have been promised: the nuclear power stations destined to generate electricity too cheap to bother metering; our personal jet-packs and hover-cars; Woody Allen’s Orgasmatron that made sex redundant; the robots that were to all the household chores; the tower blocks that would provide clean safe living spaces for all. All were lights that failed, though it is also true that many of the fantastical technologies of tomorrow’s world were envisioned – driverless taxis and talking watches among them. On balance, the future is still worth waiting for.