NAB cuts 2,500 jobs. Is Australian banking entering a productivity revolution?

Australia's banks are eliminating thousands of jobs as technology, artificial intelligence and offshore employment transform the industry's operating model. But are the cuts delivering genuine productivity improvements, or simply lowering labour costs?

National Australia Bank announced on 20 October that it would eliminate up to 2,500 internal positions, approximately 6% of its workforce, during the 2026–27 financial year.

Up to 1,500 positions will disappear before Christmas. NAB also intends to substantially reduce its use of consultants and contractors.

The restructuring will cost approximately $300 million before tax, compared with restructuring charges of around $80 million in each of the preceding two financial years.

Chief executive Andrew Irvine says the changes will eliminate duplication, accelerate decision-making and free resources for investment in technology and business growth. Corporate functions and management positions will bear the greatest impact, with little expected effect on customer-facing roles.

NAB is not alone. ANZ previously announced 3,500 job reductions and the removal or review of approximately 1,000 contractor engagements.

Is AI replacing bank workers?

Banking is particularly exposed to automation. Credit assessment, compliance, transaction processing and administration involve information-intensive activities increasingly performed by software.

But technology is only part of the story.

ABC reporting reveals that one NAB technology team plans to reduce its Australian-based workforce share from 53% to 40%, while increasing employment in India and Vietnam.

This illustrates an important distinction.

Automation reduces the labour required to produce a service. Offshoring relocates labour to lower-cost countries. Both can reduce expenses, but they have different implications for Australian productivity.

What would prove genuine productivity improvement?

Reducing employment by 6% does not automatically increase productivity by 6%.

That requires maintaining or improving output and service quality while using fewer resources.

The relevant measures include operating costs, transaction volumes, processing times, customer satisfaction and compliance performance.

NAB's full-year results on 5 November will provide more information about its cost outlook, although the benefits of restructuring will take longer to establish.

The critical question is whether Australia's banks are becoming more productive — or simply becoming smaller employers of Australians.