- Morgan Stanley has doubled its projection – 20% (up from 10%) could lose their jobs
- That’s 400,000 European roles – although many could be replaced with other job types
- AI also helps banks streamline customer targeting to further increase revenue
Morgan Stanley has warned that 20% of European banking workers could be made redundant over the next five years, up from a previous projection of 10% earlier this year.
A doubling of the number of affected workers could result in 400,000 job losses across the sector in Europe alone, all due to the impact of AI on the labor market.
According to one Bloomberg report, generative AI tools have created a 30% increase in productivity for banks, which now expect to reduce operating costs by between 4% and 9%.
AI will affect 400,000 European banking jobs
As we have seen in other sectors, it will be the lowest-paid and entry-level jobs that are most likely to be affected, including back-office processing, middle-office risk monitoring and certain compliance roles, because of the way AI can automate administrative workflows.
However, Morgan Stanley’s projection does not necessarily mean that a net 400,000 jobs will be lost. The entire job market is changing, and so is this sector, with some roles being phased out entirely and others, such as data engineers, being created.
In addition to reshaping jobs, AI can also help banks increase revenue opportunities by improving customer targeting and driving tailored ads and initiatives.
We’ve already heard that global giant HSBC is considering cutting 20,000 roles. Standard Chartered also plans to cut its workforce by 8,000, with the chief executive noting that “lower value human capital” would be most at risk – a choice of words he later regretted and apologized for.
Ultimately, Morgan Stanley’s revised forecast shows that artificial intelligence is having a much faster impact on industry than we had thought, with heavy regulatory burdens previously thought to have limited the technology’s pace.
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