The biggest banks will lose about $8.6 billion in 2016, according to the Australian Financial Services Association.
The industry group says it has recorded 2,937 job losses in 2016 and has not recorded any job losses for 2017.
Its latest quarterly report shows the sector lost more than 1,400 jobs.
It is the latest warning of a looming loss of jobs to hit the industry, as the Turnbull Government seeks to close a gap between the rate of profit for banks and the rate at which it borrows money.
Banks are under pressure to raise their rates to offset rising demand for credit and are also facing increasing competition from online lenders.
Key points:Australia’s biggest bank, Commonwealth Bank, announced its job losses as it prepared to close its doors, and its shares fell on MondayThe sector lost $8 billion in the year to March 31, and will lose another $9 billion this yearThe report showed the sector has experienced a steep decline in recent years and is facing the greatest challenge from automation and artificial intelligence.
The banks had a total of $12.3 trillion in assets under management at the end of March.
The association said the job losses were partly due to changes in the banking sector’s composition, with banks increasingly concentrating on finance and financial services, as opposed to insurance, and the financial sector.
The banking industry, which employs more than a million people, faces a series of threats, including the threat of automation and AI-enabled technology.
Mr Turnbull has previously said the banking industry will need to be more efficient and more effective to protect the nation from financial shocks.
However, he said in January that banks would not need to close their doors for at least two years, as it had been planned for.
The ACCS said in its quarterly report that while it was too early to know the full impact of the financial services sector’s job losses, the trend was consistent with the recent decline in banks’ share prices.
The ACCs annual survey of banking and other financial services businesses, which tracks job losses across Australia, showed the overall trend for the sector had been to decline.
However the association said it was still in the early stages of the job loss trend.
It also said the ACCS was forecasting that the banking and financial sector will lose more than $3.3 billion in value by 2021.