Morgan Stanley analysts warn that rapid advances in artificial intelligence (AI) could allow European banks to reduce headcount by as much as 20 percent in the short term. In a research note, analysts including Giulia Miotto said AI is expected to deliver roughly a 30 percent productivity uplift.
They estimate that this productivity gain is likely to result in a 10–20 percent reduction in staff over the next five years. Morgan Stanley added that much of the reduction is expected to occur through voluntary departures, such as retirements. The finding was reported by Bloomberg and summarized on Origo.
Examples from major banks
- Standard Chartered Plc recently announced plans to cut about 8,000 support roles over the next four years, linking the reductions to the adoption of AI. Chief Executive Officer Bill Winters said the plan would affect "lower-value human capital," a phrase for which he later apologized.
- Bloomberg previously reported that HSBC Holdings Plc is considering cutting around 20,000 jobs, on the assumption that AI will help reduce middle- and back-office roles.
- Bettina Orlopp, Chief Executive Officer of Commerzbank AG, said last week that AI could generate about €350 million (approximately $407 million) of cost savings within a few years.
Morgan Stanley's analysts also noted that the headcount reductions they forecast would represent roughly 4–9 percent of the total cost savings from AI implementation.
Why this matters
AI’s rapid adoption can automate many banking functions — customer service, risk analysis and back-office processes among them — increasing efficiency while reducing demand for some traditional roles. The timing and scale of job losses will vary by bank and will partly depend on how much of the reduction is achieved through voluntary exits.
Given Morgan Stanley’s projection and the moves already signaled by large banks, further restructuring and adaptation in the sector are likely in the coming years.
Source: Bloomberg reporting summarized by Origo.
