Banks across the world are getting set to automate significant swaths of their staff. In Australia, the largest financial institution is in an embarrassing bind, being ordered to rehire 45 employees after it announced the workers were made redundant by new AI technology. The Federal Court has backed a union appeal in the case, which found the Commonwealth Bank of Australia (CBA) had misled employees and the public bout the role of its new chatbot.

The initial dispute arose when the bank informed dozens of its long-serving workers that their roles had been made redundant. In a statement, the bank said the introduction of its new “voice bot” had resulted in about 2,000 fewer calls a week, and that as a result, the positions of 45 of these staff were no longer needed. But the staff didn’t believe the explanation. Several had worked for the bank for up to 35 years, and the news was a shock to them all.

Finance Sector Union (FSU) began to dispute CBA’s account, alleging that incoming calls at the time of the redundancies were actually increasing, not decreasing. The bank’s own managers had allegedly even been forced to take calls from customers while seeking extra staff to cover the rising workload. Offers of overtime had also been made to some of the staff who were supposed to lose their jobs.

The union took the issue to a fair work tribunal, which found in its favor. The Finance Sector Union (FSU) had alleged that CBA’s 45 employees were not informed that the roles were actually considered redundant. The union had also said that the bank’s decision to recruit staff in India “created the impression that the chatbot was a device being used to disguise the relocation of these roles to India”.

Tribunal testimony from CBA executives has forced the bank to concede it made a mistake. The tribunal heard how the bank had “overlooked a long-term increase in call volume in the weeks leading up to” the layoffs. “When taking into account the increased call volume, the weekly call count in fact rose in the weeks immediately before the 45 employees were stood down,” the court has heard. The increased call volumes, which have remained high for months, directly contradict the bank’s claim that redundancies were the result of a new AI chatbot.

CBA has now apologized to the 45 staff and will allow them to return to their old roles, or apply for other roles within the organization, or accept 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,” a CBA spokesperson told Bloomberg.

The union has welcomed the decision, but also noted the damage to staff that has already occurred. For those affected, weeks of uncertainty over their roles and their futures can be particularly stressful for individuals and their families. In a statement, FSU national secretary Julia Angrisano said it was a “massive win” for staff. “The damage has already been done,” she warned, “many will not have jobs to return to as they have already found work and can’t uproot their lives again.”

Even as it conceded error and withdrew its decision, CBA had no plans to halt its automation plans. In fact, just this week, the bank announced another AI partnership, this time with OpenAI. The deal would see CBA, which has a 10-year history of building in-house generative AI tech, partner with the San Francisco startup to further advance AI tech for bank use. CBA announced plans for an AI partnership with OpenAI to work on advanced generative AI tools aimed at “detecting scams, helping to prevent fraud and delivering more personalized services to customers”. The bank also sought to assure staff this latest development was different, and being done wthat ith an emphasis on building rather than replacing existing teams. “This is an investment in our people and will support embedding the responsible use of AI across the bank,” said a CBA spokesperson.

The incident is playing out in a wider context of significant change. As AI systems and automation take a larger role in back office, middle office, and operations departments, experts predict that as many as 200,000 finance jobs will be lost in the coming three to five years. Banks have long held an interest in finding ways to drive down costs and improve efficiencies, and AI offers an opportunity to do just that. However, if CBA is any example, this transition comes at risk of major mistakes, which can create lasting damage to trust in financial institutions from staff and customers alike.

For now, 45 workers who have lived in limbo since March must make the decision about whether they want to return to their former roles. It’s a decision many may choose not to make. The union has said that some workers have since taken new positions after months of uncertainty, and that trust between the bank’s workforce and executives has already been shattered.

There is more to come on the issue of AI in banking, however. While this battle has ended, the union is engaged in another case with the Fair Work Commission, which specifically concerns the bank’s consultation obligations in relation to its broader AI use. The implications for CBA’s adoption of AI are yet to be seen, but one thing is already clear, banks are on a long road to AI, and the journey is unlikely to be smooth.