As banks prepare to automate thousands of jobs around the world, one Australian lender has found itself in a very public, blush-inducing situation. It has been ordered to reinstate and reemploy 45 staff members who were deemed to have been made redundant by artificial intelligence. This came about as a result of a challenge by the Finance Sector Union (FSU), the finance workers’ union, that it had misled workers and the public about the effects of its new chatbot.

The saga began when the Commonwealth Bank of Australia (CBA) informed many longstanding employees that their positions would no longer be required. This was based on the launch of the bank’s new AI-powered “voice bot” that allegedly decreased the number of inbound calls by about 2,000 a week, according to the bank’s claims at the time. This was enough to no longer require 45 full-time equivalent positions, with the bank claiming that automation had made the jobs redundant.

The move prompted immediate backlash from the affected workers, who said the rationale for their dismissals didn’t match the reality. In particular, they claimed that calls were increasing, not decreasing, as the redundancies were announced. Indeed, the workers claimed that management was struggling to keep up, with claims that managers were being reassigned to the contact center to take calls and overtime being offered to the remaining workforce.

In response, the union took the case to a fair work tribunal and put forth several accusations. In addition to the charges that the bank had not adequately explained how their roles had become redundant, the FSU also claimed that the bank was “offshoring to India in stealth” and that the chatbot was just a cover. The union alleged that CBA had also begun hiring in India at the same time as the layoffs were taking place, and as the roles being eliminated were exactly the ones being filled by foreign workers, it created the impression that the whole move was an attempt to mask the outsourcing.

CBA appeared to concede this at the tribunal, with representatives admitting that there had been an error in their calculations. “The business had not considered a sustained increase in call volumes when deciding that the roles were redundant,” CBA said in a statement to the tribunal. Indeed, the bank apparently acknowledged that while the chatbot was in place, inbound calls actually went up by 2000 a week for an extended period after the redundancies were announced. “We believe this error meant the roles were not redundant,” the bank said in its tribunal response.

This about-turn has seen the bank back down from the contested redundancies and led to an apology. CBA said that it has apologized to the staff who were made redundant and that they would either be offered their old role back or the opportunity to apply for a new one, or an exit package. “We have apologized to the employees concerned and acknowledge we should have been more thorough in our assessment of the roles required,” the bank told Bloomberg.

FSU Calls the Move a Warning Against Automation Fatigue

The union has called this a “massive win” for members, but it is also a stark warning against assuming that automation and AI can be implemented overnight without serious employee backlash. For the workers affected by the move, the impact has already been made. Workers were left in limbo for weeks, with some facing the anxiety of not being able to pay their rent or other bills. As such, the episode has done lasting damage to trust between the bank and its workers, according to the FSU.

This is in spite of the fact that the bank has not in any way walked back its AI ambitions. The bank announced a new deal with OpenAI as recently as last week, which will see a partnership to build generative AI products to be integrated into the bank’s operations. The deal will focus on building scam and fraud detection tools, improving fraud prevention overall, and allowing more personalization for end-customers. But this is unlikely to wash with staff after the current debacle.

This comes as the bank is not alone in its drive to automate banking operations, but nor is it in the vanguard. According to Bloomberg Intelligence, the global banking sector could cut up to 200,000 jobs over the next 3-5 years as AI and automation are used to take over back, middle, and operations office roles. Banks see a chance to reduce costs and improve efficiency and fraud prevention. However, the Australian case will be one to make banks proceed more cautiously for fear of reputational risk or internal discord.

As for the 45 workers who are at the heart of the matter, they will need to decide whether to return to the role that they were told the bank no longer had a need for. The FSU thinks many will vote with their feet and move on, saying the trust between the bank and workers has been damaged beyond repair. “The damage has already been done,” the union said, “it’s a warning shot for other banks and employers that their workers won’t tolerate this behaviour.”

In the meantime, the union has made clear that while this case may have been settled, the wider issue of the bank’s AI use and the way it is consulting on such moves is still a topic of dispute. The union has confirmed to Bloomberg that it has a separate challenge with the Fair Work Commission on that exact issue. It remains to be seen if that case will impede the bank’s wider AI strategy, but one thing is clear: the road to AI banking won’t be as smooth as some would like to think.