AI-Driven Efficiency Cuts to Hit European Banking Sector
A new Morgan Stanley analysis reported by the Financial Times suggests that more than 200,000 European banking jobs could vanish by 2030 as lenders lean into AI and shutter physical branches. This represents roughly 10% of the workforce at 35 major banks.
Back-Office Operations in the Crosshairs
The bloodletting will hit hardest in back-office operations, risk management, and compliance, the unglamorous guts of banking where algorithms are believed capable of tearing through spreadsheets faster and more effectively than humans. Banks are salivating over projected efficiency gains of 30%, according to the Morgan Stanley report.
Global Impact
The downsizing isn’t confined to Europe. Goldman Sachs had warned U.S. employees in October of job cuts and a hiring freeze through the end of 2025 as part of an AI push dubbed “OneGS 3.0” that’s targeting everything from client onboarding to regulatory reporting.
Institutional Responses
Some institutions are already swinging the axe. Dutch lender ABN Amro plans to cut a fifth of its staff by 2028, while Société Générale’s CEO has declared “nothing is sacred.” Still, some European banking leaders are urging caution, with a JPMorgan Chase exec telling the FT that if junior bankers never learn the fundamentals, it could come back to haunt the industry.
A Word of Caution
As AI takes hold in the banking sector, some experts warn that the lack of human touch could have long-term consequences. JPMorgan Chase’s cautionary words echo concerns about the impact on junior bankers and the need for balance between efficiency gains and maintaining fundamental skills.
