More than 200,000 jobs in the European banking sector could be eliminated by 2030 as financial institutions increasingly adopt artificial intelligence and reduce their physical branch networks, according to a Morgan Stanley analysis reported by the Financial Times. This potential reduction represents approximately 10% of the workforce across 35 major banks.
The job losses are expected to primarily affect back-office operations, risk management, and compliance departments. These areas are seen as ripe for automation, with algorithms capable of processing data and performing tasks more efficiently than human employees. The Morgan Stanley report projects efficiency gains of up to 30% for banks that successfully implement AI solutions.
The trend extends beyond Europe. Goldman Sachs announced in October a hiring freeze through the end of 2025, coupled with potential job cuts, as part of its "OneGS 3.0" initiative, which aims to integrate AI into various operations, including client onboarding and regulatory reporting. ABN Amro, a Dutch lender, intends to reduce its workforce by a fifth by 2028, and Société Générale's CEO has indicated that all aspects of the bank's operations are under review.
AI, at its core, involves creating computer systems that can perform tasks typically requiring human intelligence, such as learning, problem-solving, and decision-making. In banking, this translates to AI systems that can analyze financial data, detect fraud, assess risk, and automate customer service interactions. Machine learning, a subset of AI, allows these systems to improve their performance over time as they are exposed to more data.
The increasing adoption of AI in banking raises significant societal implications. While banks aim to improve efficiency and reduce costs, the displacement of human workers could lead to unemployment and require workforce retraining initiatives. The concentration of AI expertise within a few tech companies also raises concerns about potential bias in algorithms and the need for ethical guidelines in AI development.
Despite the potential for job losses, some banking leaders are urging caution in the rapid adoption of AI. A JPMorgan Chase executive, speaking to the Financial Times, emphasized the importance of carefully considering the long-term consequences of automation. The executive cautioned that if junior employees are not given opportunities to learn and grow, the bank could suffer in the long run.
The shift towards AI in banking is part of a broader trend across industries, driven by advancements in computing power, data availability, and algorithmic development. As AI technology continues to evolve, its impact on the workforce and society will likely intensify, requiring careful planning and proactive measures to mitigate potential negative consequences.
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