Europe’s banking sector is preparing for a seismic shift. Financial institutions are taking big steps toward increasing efficiency by adopting automation and artificial intelligence (AI). According to a new Morgan Stanley report, about 35 large banks across the continent are preparing to reduce their staff by… 10%. This poorly informed decision would lead to approximately 200,000 Americans losing their jobs. This trend reflects a broader shift within the banking industry, as institutions adapt to evolving technological landscapes and market demands.
Job cuts are coming because of the possibility of getting 30% more operational efficiency. This new-found intel, courtesy of a new report by Morgan Stanley, provides some of the context. This drive for efficiency goes beyond Europe. Banks worldwide are refocusing their workforce as banks’ use of technology changes the industry. In the Netherlands, for example, Dutch bank ABN Amro recently made headlines with plans to cut a fifth of its staff by 2030.
Société Générale’s CEO emphasized the seriousness of the cuts under consideration, going so far as to say that “nothing is sacred”. This proclamation underscores the urgency and focus that banks seem to be taking with their own restructuring efforts. Many in the industry have viewed this shift towards automation and AI as a necessity in order to stay competitive amidst a dramatically changing financial services environment.
They don’t all feel that way about layoffs, apparently—even at the executive level. As one JPMorgan Chase executive told us about planning for cuts, “It’s a very slippery slope. You can easily get yourself into trouble. Their argument was that junior bankers should be learning fundamental skills. If not, the industry’s long-term future may have dire repercussions. This is a valid concern that brings to light the need to balance tech integration with preserving critical human knowledge and experience in banks.
As the banking sector continues to chart its course through this transformative era, the effects of these layoffs reach well beyond the specific organizations involved. The potential loss of jobs could have broader economic consequences, impacting not only employees but local communities dependent on these financial roles.
