AI to Wipe Out Over 200,000 European Banking Jobs by 2030
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US banking giant Morgan Stanley recently predicted that over 200,000 banking jobs across Europe are likely to be cut by 2030 due to the AI push, as reported by The Financial Times (FT).
According to the report, banks in Europe currently employ roughly 2.12 million people, meaning that a 10% reduction that Morgan Stanley is predicting would mean around 212,000 jobs lost. The bank has noted that financial institutions are highly interested in the benefits promised by AI, and are already pursuing them while closing their branches and pushing more and more of their operations and services online, through digital transformation.
This puts banking jobs across Europe under threat. Morgan Stanley analysts looked into 35 lenders, revealing that cuts are likely to come from “central services” divisions, such as back- and middle-office roles, risk management, and compliance positions.
While European lenders struggle to meet investor demands, Morgan Stanley research found that banks attribute up to 30% in efficiency gains from AI and digitalization.
AI Can Cut Costs, But It Also Displaces People From Jobs
Artificial Intelligence is continuously mentioned as the reason to restructure operations and an opportunity to improve cost-to-income ratios. As part of its forecast, Morgan Stanley highlighted that greater digitalization and AI adoption would overhaul the European banking ecosystem in the next four years, especially when it comes to consumer-focused lenders and in countries like Germany and France, where banks’ cost-to-income ratio is still high.
As a result, the expansion of AI adoption and the fears that come with it – particularly involving massive job losses – persist, which is what led to Morgan Stanley’s forecast of hundreds of thousands of jobs that are expected to be lost.
However, Morgan Stanley’s prediction is not the only one – the same sentiment was echoed by Andrew Bailey, the governor of the Bank of England, who said that AI will likely displace people from jobs. But, he also insisted that it would not cause mass unemployment. Apart from him, similar predictions came from other analysts, such as Bloomberg Intelligence, which said a year ago that global banks may cut as many as 200,000 jobs in the next three to five years.
Ultimately, the push toward AI-driven efficiency is speeding up, and it is leaving European banks in a situation where they have to meet investor demands for lower costs or deal with the societal impact of widespread staff reduction.
