(BOSTON) State Street Corp. plans to shrink its workforce by up to 7,000 workers by 2020 as it fights to jump-start growth stalled by low interest rates and stiff competition.
Through layoffs, turnover, and moving employees to new ventures, it aims to become a more tech-driven company less reliant on faxes and manual trades.
The Boston-based financial firm has in recent months announced smaller layoffs as it launches its new technology program but had avoided saying how many total employees it planned to lose over the longer term.
But at an investor conference in late February, the transcript of which recently became available, the larger job reductions were outlined. The staffing cuts were first reported by the Boston Business Journal.
“We believe that we will reduce our staff across the globe 6,000 to 7,000 people over the five-year process due to this technology,” Michael Rogers, State Street chief operating officer, said at the conference on Feb. 24. “Now most of these people will be redeployed into new business or are not replaced due to turnover, but that’s a big savings for us across the world.”
State Street has 32,000 employees worldwide.
The company invested heavily in technology six years ago and at that time announced the elimination of more than 2,200 positions over 2010 and 2011.
The staff cuts in the next few years will be a significant downsizing for State Street, said Gerard Cassidy, a managing director at RBC Capital Markets in Portland, Maine.
“It’s a big number,” Cassidy said. “The business is dictating that kind of need to be more efficient. They’re fighting hard to move forward.”
Company officials said the cuts would be across all departments, but would not comment further on the projections.
“We will continue to evaluate the needs of the organization to advance our long-term strategic priorities and continually look for ways to better align the organization,” spokeswoman Anne McNally said in a statement. “But we will also continue to hire in key areas of the business that are growing, such as data and analytics, or in areas where we need to add expertise.”
Despite layoffs in recent years, the company head count overall has grown by 2,500 employees, McNally said.
State Street, which manages money and also handles administrative services for mutual funds, pensions, and other large investors, announced in mid-March that it was going to lay off 252 people in Boston and Quincy, mostly senior executives. In October it laid off 600 people companywide.
In 2015 it reported revenues of $10 billion, essentially unchanged from 2014.
State Street is trying to further digitize its business, so more functions are handled with technology. Rogers said State Street still handles 50,000 faxes a month from its clients and 20,000 manual trades a day.
The company is also under pressure from Wall Street investors to slash expenses as low interest rates have eaten into its profits.
If interest rates stay low for the next decade, State Street and other financial firms will have to look at significant staff reductions again, Cassidy said.
“The rate environment is not their friend,” he said. “It appears that the business is forever changing and changing faster and the low interest rate environment has had a drag on their revenue.”
Company executives said at the February conference that State Street expects to shave $550 million in expenses through 2020.