The tussle over technology between the bank and staff took a painful twist as Australia’s biggest lender botched a termination of staff allegedly made redundant by a chatbot.

In a major embarrassment, the Commonwealth Bank of Australia (CBA) was recently forced to reinstate 45 workers after prematurely dismissing them. The decision, which the bank has since apologized for, was triggered by a complaint made by the Finance Sector Union (FSU) in the Fair Work Commission.

The controversy centers on CBA’s decision to inform dozens of staff members, many with decades of service, that their roles would no longer be required. In a statement provided to Bloomberg, CBA officials blamed the redundancies on lower call volumes as a result of the launch of the company’s new “voice bot” automated response technology. The bank said the technology has so far resulted in a 2,000 drop in calls per week, with the savings justifying fewer workers.

According to CBA, these decisions are not uncommon in Australian workplaces, with it being perfectly acceptable to let workers go when their role is no longer required.

While the union has accepted the apology, it claims that the bank botched its technology rollout and suffered reputational damage because of it. The union said: “This is an important win for the members in this case, as it demonstrates to all of the bank’s staff that it will fight to get things right and protect its members from employers who act hastily and arbitrarily.”

However, according to workers, the reasoning provided by the bank was simply not true, and may have even been used to mask a decision to offshore some roles to India, which was happening at the same time. In particular, the union alleged, rather than being made redundant, the roles were terminated because incoming calls had in fact increased.

Furthermore, instead of the reduction in calls resulting from increased chatbot use, staff reportedly told management that incoming calls had actually increased during this time, putting even more pressure on the phone center. The union said that at the time, the bank was urgently “responding to increasing call volumes, instructing managers to assist in the contact center and offering overtime to existing staff.”

The union also raised questions about whether CBA would have made those roles redundant even if the bank’s claim about lower call volumes were true. As proof, the union pointed to a simultaneous hiring process in India, claiming: “We have an alternative basis for believing that the real reason for the termination was the assignment of these positions to an India-based center and that the announcement of the bot is a convenient smokescreen.”

In the course of its deliberations, the tribunal also heard from bank representatives, who admitted a glaring mistake was made in the days before the termination of roles. In fact, the representatives told the tribunal that they had been unaware of the fact that call volumes had increased by 5% just before the layoffs. According to the tribunal’s summary of the evidence: “The volume of calls in the area increased significantly and was sustained for several months after the hearing dates, meaning the bank conceded the roles were not redundant.”

The oversight forced CBA to reverse course, apologizing to workers and making a formal offer to the 45 workers who have since been reinstated. CBA spokesperson said in a statement provided to Bloomberg: “The decision to make the positions redundant was taken after considering the relevant work and did not take into account some factors affecting the phone center over the last few months.”

The bank spokesperson added, “We have apologized to the employees concerned and acknowledge we should have been more thorough in our assessment of the roles required.”

In a larger context, the saga is seen as a cautionary tale by some observers, with the union chief labelling it a “massive win” for workers. However, in addition to the weeks of uncertainty the episode caused the workers, the union has highlighted the reputational damage the botched dismissal had caused the bank, which has lost credibility for its claim to have made those positions redundant.

The situation highlights the uncertain future facing bank staff as artificial intelligence and automation are used by companies to reduce headcount. With many banks planning to expand their use of AI in areas such as fraud prevention and control, the risk that human employees will be displaced is seen as growing.

CBA itself has shown no sign of slowing down its investments in AI and tech despite the incident, and on Friday, it announced a partnership with OpenAI to develop advanced generative AI tools. The tie-up will be used to advance the bank’s capabilities in a variety of fields, such as fraud and scam detection, AI compliance, and improving services for customers.

The bank insisted to Bloomberg that the partnership would be focused on using AI responsibly, with the bank itself committing: “We take our social and ethical responsibilities seriously and are committed to applying AI safely and responsibly.”

AI is expected to transform the financial sector, with estimates suggesting up to 200,000 bank and insurance industry workers could be let go around the world in the next three to five years.