Financial institutions across the world are on track to make large swathes of their workforce redundant, but few announcements have caused quite as much of an uproar as this month’s scandal at Australia’s Commonwealth Bank (CBA). After announcing that 45 staff had been made redundant by an AI bot, the bank has been forced to take back the workers by a tribunal.

The controversy started when the bank declared that positions had been made redundant by a new chatbot. An “AI voice bot,” announced by CBA just weeks earlier, had been used to cut back on the number of staff required to manage call volumes, according to the bank’s own explanation. Management claims that the bank had experienced a drop of about 2,000 weekly calls, meaning they no longer needed as many people answering them. At the time, management said the bot had “improved efficiency,” but workers described a very different picture.

When the decision to make 45 workers redundant was announced, employees told the union they were stunned, but they also felt they were given a very mixed message. Union members said that call volumes were in fact increasing, not decreasing. Moreover, staff insist they were actively being urged to take overtime as the bot was put in place. For these reasons, some in the industry are now saying the layoff was a gross miscalculation, as CBA simply failed to see that calls were actually on the upswing.

The Finance Sector Union (FSU), which helped organize staff members during this period, has leveled the charge that CBA was actually shifting the work offshore to India as part of this whole episode. The union claims that while the bank was telling workers their positions were going to be redundant due to an AI bot, the bank had actually started hiring in India around the same time. The apparent contradiction made some workers suspect the bot was actually a front for offshore work.

The union made its case in front of a fair work tribunal, and the bank has since made an embarrassing climb-down. CBA was forced to admit they had “misjudged the level of activity at the time the decision was made,” according to documents filed at the tribunal. The internal investigation, they said, confirmed the bank had failed to “fully appreciate the impact that an increasing call volume would have on the roles” that were declared redundant. This admission has been enough to back CBA into a corner, and they have now said workers have the right to return to their old jobs, seek new positions at the bank, or take an exit package.

The union has called this a “massive win” for its members, but notes that some workers have already been damaged by the process. Workers have been left with a number of issues to do with uncertainty and stress from the weeks when they thought they might be losing their jobs. The bank has said it will try to be “more open and transparent” in the future to minimize the reputational damage. But the union was very clear in its warning to other banks that automation and layoffs are inextricably linked.

“The damage has already been done,” the union said in a statement, “this is an opportunity to redouble our efforts to make sure it never happens again.” It is an ominous warning for banks, which are under a lot of pressure to make these workers redundant through AI. Indeed, even as CBA dropped this redundancy claim, it announced a fresh partnership with OpenAI to develop generative AI tools. But OpenAI has been a controversial partnership from the start in the eyes of the union, which is concerned about how these new technologies will be deployed on a wider scale.

AI and automation loom large in this industry, and experts have warned that up to 200,000 banking jobs will be redundant over the next three to five years. AI is being seen as a way to help banks cut costs in many sectors, such as back office, middle office, and operations. But as many workers can attest, despite a lot of talk from banks, there is sometimes a human cost to this process.