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From Tellers to Tech: Labor Demand Shift and Bank Lending

Author

Listed:
  • Yuna Heo

    (University of Basel - Faculty of Business and Economics; Swiss Finance Institute)

  • Steven Ongena

    (University of Zurich - Department Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR))

Abstract

Using a novel measure of the composition of bank hiring, we examine how a labor demand shift affects bank lending. We find that the banks' demand shift toward higher-skilled labor is positively associated with lending. At the same time the banker-machine replacement also increases lending, through channels of operating efficiency, productivity, and lending capacity. This effect is stronger for banks that hire tech-bankers paying high wages. Conversely, lending shrinks for banks that reduce the number of relationship bankers. This effect is more concentrated among small banks and seems driven by declines in commercial and industrial loans. Overall, our findings indicate that the recent transformation in bank hiring expands credit supply, yet possibly also erodes relationship lending.

Suggested Citation

  • Yuna Heo & Steven Ongena, 2026. "From Tellers to Tech: Labor Demand Shift and Bank Lending," Swiss Finance Institute Research Paper Series 26-54, Swiss Finance Institute, revised Sep 2026.
    • Handle: RePEc:chf:rpseri:rp2654
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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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