200,000 European banking jobs at risk, warns Morgan Stanley
Morgan Stanley forecasts over 200,000 European banking jobs could be lost in the next four years due to accelerated AI adoption and branch closures. Analysts predict a 10% workforce reduction by 2030, primarily impacting central services divisions as lenders seek efficiency gains and improved returns on equity.
Morgan Stanley has now issued an AI job warning for the banking sector. More than 2,00,000 banking jobs in Europe could be lost in over next four years as lenders are accelerating the adoption of artificial intelligence and planning to close branches, according to analysts at Morgan Stanely.
As reported by Financial Times, the investment bank estimates that the industry could cut 10 per cent of its workforce which amounts to more than 2,00,000 by 2030. The report further highlights that these job cuts will be driven by efficiency gains from digitalisation and AI. The analysis done covers around 35 European lenders which employ around 2.12 million staff. As per the Morgan Stanley analysts these cuts will be mainly concentrated in the central services divisions which includes back office, middle office, risk management and compliance roles.
AI as a driver of restructuring
“Many banks have quoted efficiency gains coming from AI and further digitalisation to the tune of 30 per cent,” Morgan Stanley noted. The report highlights how lenders are under pressure from investors to reduce costs and improve returns on equity, which continue to lag behind US rivals.Banks have already begun citing AI as a driver of restructuring. Dutch lender ABN Amro announced plans in November to cut about a fifth of its staff by 2028, while Société Générale chief executive Slawomir Krupa warned earlier this year that “nothing is sacred” in his campaign to reduce costs.
Analysts also adds that AI offers bank an opportunity to improve their cost-to-income ratios which is a key measure of efficiency. The forecast also highlight the fact that his digitalisation could reshape Europe’s banking landscape, particularly in countries such as France and Germany, where cost‑to‑income ratios remain high.UBS has already experimented with AI, turning its analysts into avatars to deliver video briefings to clients.
Jason Napier, head of European banks research at UBS, said: “Those who still need convincing that AI will significantly change financial services should spend more time exploring the tools which are already available.”
Some bankers urge caution on AI over reliance
Despite the increasing AI adoption, some bankers have urged caution.Conor Hillery, JPMorgan Chase’s co‑chief executive for Europe, the Middle East, and Africa, warned against rushing into AI adoption at the expense of training.
“The one thing we have to be very careful about — in this rush and excitement about AI in our world of banking — is that people don’t lose an understanding of the basics and fundamentals,” he said.Hillery added that JPMorgan is trying to balance AI integration with ensuring junior staff are properly trained in core tasks such as building cash flow models and calculating price‑to‑earnings ratios. “Otherwise, we’re storing up a big problem for the future,” he cautioned.