Morgan Stanley Warns AI Push Could Wipe Out 200000 European Banking Jobs
Europe’s banks could eliminate more than 200,000 jobs by the end
of the decade as lenders ramp up artificial intelligence and further reduce
physical branch footprints, according to analysis by Morgan Stanley first
reported by the Financial Times.
The report estimates that European banks could cut roughly 10
percent of their workforce by 2030.
The projection is based on a review of 35 major lenders employing
about 2.12 million people, implying that around 212,000 roles could be removed
over the next five years.
Morgan Stanley’s analysts said the impact is unlikely to be evenly
distributed across banks or functions.
Instead, they expect the largest reductions in central services
roles, including back office and middle office positions, as well as jobs in
risk management and compliance.
These areas are seen as particularly susceptible to automation as
AI tools improve at handling routine processes, data checks, and reporting work
that has historically required large teams.
“Many banks have quoted efficiency gains coming from AI and
further digitalisation to the tune of 30 per cent,” Morgan Stanley said,
according to the Financial Times.
The drive to automate is being fueled by investor pressure to
improve profitability. European lenders have struggled for years to match the
returns delivered by many US banks, especially on return on equity.
With conventional cost cutting efforts losing momentum, AI is
increasingly being framed as the next major lever for efficiency.
Morgan Stanley’s analysts pointed to cost to income ratios as a
key metric investors will watch, arguing that AI offers a fresh opportunity to
improve operating efficiency at a time when traditional cost reduction programs
have “run out of steam”, according to the Financial Times report.
Still, the rush to deploy AI is prompting caution from senior
figures inside the industry.
Conor Hillery, JPMorgan Chase’s co-chief executive for Europe, the
Middle East, and Africa, warned that speed should not come at the expense of
core banking skills.
“The one thing we have to be very careful about in this rush and
excitement about AI in our world of banking is that people don’t lose an
understanding of the basics and fundamentals,” Hillery was quoted by the
Financial Times as saying.
He added that without balancing automation with human training,
“Otherwise, we’re storing up a big problem for the future.”
The push is not confined to Europe. In the United States, Goldman
Sachs has been implementing its OneGS 3.0 program, a multi year effort to
rework operations using AI.
The bank has signaled a hiring slowdown and targeted job cuts,
while indicating that some efficiency gains could be reinvested into higher
value advisory work.