A worrying new report has just added a credible voice to the idea that computers are coming for our jobs.

As I write, the clients-only Wells Fargo report has not been made public, but those who have seen it quote the 225-page document as saying technology will slash 10 per cent of banking jobs over the next decade.

While the number of North American manufacturing jobs shrinks, service sector jobs, including in banking, have been a mainstay of job creation. That may be about to change.

"Technological efficiencies will result in the biggest reduction in head count across the U.S. banking industry in its history," said an article released by the global business news service Bloomberg.

In a story titled Tech forecast to destroy more than 200,000 US bank jobs the Financial Times quotes the report's author as saying the job cuts will be the "greatest transfer from labour to capital" of all time, and will represent a "golden age of banking efficiency."

With such remarks, the report by well-known banking analyst Mike Mayo seems aimed at people like bank shareholders who yesterday lost money in the markets.

But for bank employees and those worried about where jobs will come from, the report from Wells Fargo, the U.S. banking giant famous for its stagecoach origins and for its 2016 account fraud scandal, the news may not be so good.

Wells Fargo's stagecoach was state of the art in the 1860s, but now the bank says new technology will allow banks to cut staff and increase profits. (Rick Wilking/Reuters)

The essence of the report is that a huge investment in technology by the financial industry, estimated at $150 billion US annually including in artificial intelligence, is paying off. It means new job cuts would allow the banks to continue to find efficiencies well beyond the ATM banking and branch closures familiar to Canadians that have helped banks repeatedly increase profits.

While the report focuses on the U.S. industry, Canadian banks are known as leaders in many areas of banking automation, including debit cards and remote banking.

As the Wells Fargo report says, large banks able to take advantage of the new technology will be among the greatest beneficiaries. The biggest Canadian banks with operations in the U.S. and around the globe usually rank in the top 10 North American banks by capitalization.

More job cuts

Front-line branch employees have already been thinned out, but the new cuts are expected to be spread across branches and head offices. Call centres will also lose jobs, the report says.

The loss of relatively low-paying jobs in customer service is a reminder that low wages don't prevent businesses from cutting staff, something opponents of minimum wage increases sometime suggest. With half of a business's outlays going to employment costs, reducing workers whatever their wage level remains one of the only practical ways of increasing profits.

The trend also confirms concerns over the growing income divide between jobs that can be replaced by computers and those that, so far, cannot. Among the jobs that the report says will remain relatively safe include the tech workers needed to keep the banking software running and secure.

Other jobs less likely to be cut will be in sales, consulting and advising, the report says.

Earlier fears for job losses were due to automation where robots could do the physical work that formerly required human labour or machine operators. As many reports told us as early as 2013, robots were replacing warehouse workers and assembly line employees.

At the time service jobs were seen as an alternative, requiring young people to learn to use their brains rather than their brawn. This latest report is a reminder that as software becomes more sophisticated, higher-level jobs will also disappear, and not just in banking.

Despite branch closures, Canadians have welcomed bank technology, but there may be more job cuts to come. (Chris Helgren/Reuters)

Predictions a decade into the future, whether in banking or any other industry, are inevitably uncertain.

Many economists have insisted that job losses in one sector do not mean there will be fewer jobs overall. So far that has proven true.

But a recession caused by the simmering global trade war may mean it will take time for society to create new jobs lost to technology in administrative jobs like banking.

Banking's life blood

This week new figures from the U.S. show manufacturing slumped sharply for the second month in a row as the U.S.-China trade war begins to bite. That decline in factory activity has been described as one of the triggers for the latest stock market tumble in the U.S. and Canada.

"The disappointing data is only fanning long-standing fears of slowing global growth," said Alec Young, managing director of Global Markets Research at FTSE Russell, this week.

A slowing economy is not good for banks. As Canadians look for ways to cut back they will be less likely to pile on debt, expanding the loan book of banks, their life blood.

When it was expected interest rates were on the way up banks would at least have benefited as borrowers were forced to pay a little more to extend their loans. But now rates seem to be on the way back down.

If a recession comes, banks will be competing to get their costs down too, making the replacement of human workers with much cheaper technology an alluring prospect.

Follow Don on Twitter @don_pittis