Over the next five years, until 2030, More than 200,000 jobs in European banks may be at risk due to AIaccording to the Financial Times, which points to Morgan Stanley’s forecasts that indicate that The sector can reduce its workforce by 10% by 2030.
Employee cuts will be most likely in banks’ divisions dedicated to their core internal services, which include back-office positions, middle management, and risk management and compliance positions. Currently, the top 35 European banks employ around 2.12 million people, meaning that a 10% staff reduction in them would lead to around 212,000 layoffs.
European banks are facing pressure from investors to find new sources of cost-cutting and accelerate revenues and profits, as they routinely lag their U.S. rivals in this regard. Meanwhile, they are striving to realize the time and cost savings that AI promises, as well as moving more of their operations to the cloud. Apparently, many have managed to improve their efficiency thanks to AI and an increase in their digitalization by up to 30%.
In fact, banks are already beginning to cite AI as a catalyst for restructuring their operations. And this is going to lead to layoffs. Last November, the Dutch entity ABN Amro confirmed that it plans to lay off a fifth of its full-time workforce by 2028.
AI has offered European banks a great opportunity to improve their cost-to-income ratios, as the rounds of expense reduction they have undertaken no longer allow for further improvements. And according to forecasts, the European banking sector can, thanks to digitalization and the adoption of AI, change significantly in the coming years. Especially those dedicated to consumers. Also in countries like France or Germany, where banks’ cost-to-income ratios remain high.
An example of how AI can change the functioning of European banks is at UBS, which has begun to use it to turn its analysts into avatars and send videos of these simulations of bank employees to its clients.
There are many European banks that have shown interest in adopting these types of measures to save thanks to AI, but some of the main entities have already warned of how counterproductive the hasty integration of this technology will be.
Thus, from the EMEA wing of JPMorgan Chase, they point out that what needs to be most careful is to prevent people from losing their understanding of the basic and fundamental concepts in the midst of this rush and excitement about AI in the banking sector.
From the entity they have indicated that in their case they are trying to reach a balance between using AI to accelerate core functions y Ensure your junior-level employees are properly trained in core taskssuch as the development of cash flow models and cost-to-income ratios. If they don’t succeed, they are aware that there may be a big problem in the future.
