Analysts project that advancements in artificial intelligence (AI) could jeopardize approximately 200,000 banking jobs across Europe by 2030. This forecast is detailed in a recent report from Morgan Stanley, as highlighted by the Financial Times. The anticipated job losses represent around 10% of the finance workforce in Europe, affecting over 35 major banks primarily in back- and middle-office functions.
Job Cuts Driven by Efficiency Gains
The report indicates that roles in risk management and compliance are most vulnerable, as AI technologies can enhance efficiency by as much as 30%. The trend of reducing workforce numbers is already apparent, with physical bank closures resulting in significant job losses in recent years. Since 2015, more than 6,000 bank branches have shut down in the UK alone, raising concerns about the future of human employment in the sector.
Several banks, including ABN Amro, Société Générale, and Goldman Sachs, have acknowledged the potential for job cuts or hiring freezes due to AI’s increasing role in operations. While many are adapting to digital transformation, the looming question remains: can AI fully replace the role of bankers in the long run?
Concerns Over Future Workforce Development
In contrast to the prevailing sentiment of automation leading to job cuts, JPMorgan Chase CEO Jamie Dimon has voiced concerns about the implications of reducing entry-level positions. He argues that eliminating junior roles could hinder the development of essential skills and training among new employees. Although AI might streamline processes in the short term, this shift could disrupt career progression, preventing newly-qualified workers from entering the industry.
Dimon indicated that the integration of AI could potentially lead to improved work-life balance for employees, including the prospect of shorter working weeks. He cautioned that the industry must approach these changes with caution to avoid long-term detrimental effects on workforce development.
The impact of AI on the banking sector has so far been gradual, largely due to stringent regulatory requirements. However, as compliance-friendly AI tools become more readily available, the effects seen in the technology and retail sectors might soon be mirrored in banking. The industry stands at a critical juncture, where embracing AI could redefine job roles, reshape career paths, and potentially alter the landscape of financial services across Europe.
