Global banks are expected to cut up to 200,000 jobs over the next three to five years as Artificial Intelligence (AI) increasingly takes over tasks traditionally performed by human workers, according to a recent report by Bloomberg Intelligence (BI).
The report, based on a survey of Chief Information and Technology Officers, reveals that, on average, banks are preparing to reduce 3% of their workforce.
The most vulnerable areas are likely to be back office, middle office, and operations, with customer service roles also at risk due to the rise of AI-powered bots.
Positions involving repetitive, routine tasks, such as know-your-customer (KYC) responsibilities, are also at risk, though Tomasz Noetzel, BI’s senior analyst who authored the report, emphasized that AI will not entirely eliminate these jobs.
Instead, the workforce will undergo a transformation, he said.
Nearly a quarter of the 93 respondents in the survey foresee a more significant reduction in headcount, with cuts ranging from 5% to 10%. This group includes major institutions such as Citigroup, JPMorgan Chase, and Goldman Sachs.
The findings suggest that these changes will reshape the industry and contribute to stronger financial performance. By 2027, banks could see pretax profits rise by 12% to 17%, adding up to $180 billion to their collective bottom line, driven by the productivity gains from AI, according to Bloomberg Intelligence. In fact, 80% of respondents believe generative AI will boost both productivity and revenue by at least 5% within the next three to five years.
Banks, which have spent years upgrading their IT systems to streamline processes and reduce costs in the aftermath of the financial crisis, are now embracing the latest AI technologies to further enhance productivity.
Citigroup’s June report highlighted that the banking sector is likely to experience more job displacement from AI than any other industry, with 54% of roles at risk of AI-led job displacement. Additionally, another 12% of banking jobs could potentially be augmented by AI.
Even though AI may replace certain roles within the industry, Citigroup pointed out that this doesn’t necessarily mean a reduction in overall headcount. Financial firms are expected to hire new positions, such as AI managers and AI-focused compliance officers, to oversee the technology’s implementation and ensure it complies with regulatory standards.
Over the past year, the world’s largest banks have been increasingly experimenting with AI, motivated by the promise of boosting staff productivity and cutting costs. The report suggests that AI could add $170 billion to the banking industry’s revenues by 2028.
JPMorgan CEO Jamie Dimon also discussed the broader impact of AI in a 2023 interview with Bloomberg Television. He expressed his belief that AI will significantly impact the workforce, potentially leading to shorter workweeks for future generations due to its ability to automate tasks and enhance productivity, while also acknowledging concerns about potential misuse of the technology by “bad people.”
