Major Global Banks to Slash 200,000 Jobs as AI Revolutionizes the Industry

Global banks are set to eliminate as many as 200,000 jobs over the next three to five years, driven by the rise of artificial intelligence (AI) and its encroachment on tasks traditionally handled by human workers. This revelation comes from a report by Bloomberg Intelligence (BI), which highlights the transformative potential of AI within the banking sector.

According to the BI study, chief information and technology officers across leading financial institutions predict an average workforce reduction of 3%. This figure could climb higher, as nearly a quarter of the 93 respondents forecast a steeper headcount decline of between 5% and 10%. The peer group covered by the report includes banking giants such as Citigroup Inc., JPMorgan Chase & Co., and Goldman Sachs Group Inc.

“Back office, middle office, and operations roles are most at risk,” said Tomasz Noetzel, the BI senior analyst who authored the report. “Any jobs involving routine, repetitive tasks are vulnerable. However, AI will not completely replace these roles but rather lead to a transformation of the workforce.”

The report also suggests that customer services may experience significant changes, with bots increasingly managing client interactions. Critical functions like know-your-customer (KYC) checks are also expected to be impacted.

Despite the potential job cuts, AI is projected to have a positive financial impact on the industry. BI’s analysis estimates that by 2027, banks could achieve pretax profits 12% to 17% higher than they would have otherwise, adding as much as $180 billion to their collective bottom line. Notably, eight in ten respondents anticipate that generative AI will boost productivity and revenue by at least 5% in the next three to five years.

Citi’s June 2024 report echoes these findings, noting that the banking sector faces the highest potential for AI-driven job displacement compared to other industries. According to Citi, about 54% of roles in banking have a high likelihood of being automated.

However, not everyone views this transformation as solely negative. Many experts emphasize AI’s potential to create new roles while reshaping existing ones. Speaking to Neusroom in August 2023, Ojo Ademola, a UK-based Professor of Cybersecurity, highlighted the dual nature of AI’s impact.

“The threat AI poses is not just in taking jobs; in fact, AI can be used to create more jobs than it replaces,” Ademola said. “The real danger lies in unethical uses of AI when it falls into the wrong hands.”

Ademola’s perspective is shared by Napa Onwusah, the first female leader of the Startups Segment for Amazon Web Services. She told Neusroom that individuals who fail to adapt to the evolving technological landscape are most at risk.

“I strongly believe that AI will create new jobs,” Onwusah stated. “Those who fail to upskill and embrace AI will lose their jobs to those who do. Now is the best time to start mastering how to integrate AI into your work. Skills like Prompt Engineering, which involves optimizing AI language models for specific tasks, are emerging. To leverage AI effectively, you must understand how to influence or prompt it correctly.”

JPMorgan Chase CEO Jamie Dimon also struck a balanced tone in a 2023 interview with Bloomberg Television, acknowledging the disruptive nature of AI while highlighting its potential benefits.

“AI will dramatically improve workers’ quality of life,” Dimon said. “Your children will probably live to 100 and work three-and-a-half days a week because of advancements in technology.”