European banks plan to cut 200,000 jobs as AI takes hold

The banking landscape in Europe is poised for a significant transformation as institutions embrace artificial intelligence to enhance efficiency. A recent analysis from Morgan Stanley, highlighted by the Financial Times, indicates that over 200,000 jobs in the European banking sector could be eliminated by the year 2030. This reduction represents approximately 10% of the workforce across 35 major banks, primarily affecting back-office operations, risk management, and compliance roles. The shift towards AI is driven by the potential for remarkable efficiency improvements, with projections suggesting gains of up to 30%. Banks are increasingly turning to algorithms that can process data more swiftly and accurately than human employees. However, this trend is not limited to Europe; U.S. banks are also bracing for similar changes. Goldman Sachs recently informed its staff about impending layoffs and a hiring freeze until the end of 2025, part of an initiative known as 'OneGS 3.0' that focuses on streamlining various banking processes. Some banks have already begun implementing drastic measures. For instance, Dutch lender ABN Amro has announced plans to reduce its workforce by 20% by 2028, while Société Générale’s CEO has remarked that no area of the organization is safe from potential cuts. Despite the urgency to adapt, some banking leaders are advocating for caution, noting that a lack of fundamental training for junior bankers could have long-term repercussions for the industry.