European banks may slash 20% jobs due to AI: Morgan Stanley
The swift proliferation of artificial intelligence could allow European banks to decrease their workforce by up to 20% in the near term, as indicated by analysts. AI is projected to yield productivity gains of 30 percent, according to analysts including Giulia Miotto in a research note released on Thursday. The development is expected to lead to job reductions ranging from 10 per cent to 20 per cent over the next five years, with the majority of the decline anticipated to occur through voluntary departures, such as retirements. Numerous bank executives have recognised that AI is poised to disrupt certain job roles as companies begin to integrate the technology into various functions.
Standard Chartered Plc recently announced plans to eliminate nearly 8,000 support roles over the next four years, attributing this decision to advancements in AI. Chief Executive Officer Bill Winters stated that the plan would impact “lower-value human capital,” although he subsequently expressed regret for his phrasing. HSBC Holdings Plc is considering a reduction of approximately 20,000 positions, predicated on the expectation that artificial intelligence will facilitate a streamlining of its middle and back office operations, as reported.
Bettina Orlopp stated last week that AI is expected to generate cost savings of approximately €350 million in the coming years. The headcount reductions projected by Morgan Stanley would yield cost savings amounting to approximately 4 per cent to 9 per cent of the total, according to the analysts in the note. The analysts indicated that AI presents an opportunity to enhance revenue, particularly by assisting banks in determining which products to offer to specific customers. Banks that incorporate retail, savings, insurance, and wealth platforms are more strategically positioned to capitalise on that trend, they indicated.
