20% of European banking jobs at risk due to AI replacement, says Morgan Stanley

Morgan Stanley doubled its forecast: 20% (compared to 10%) could lose their jobs
This represents 400,000 European jobs – although many of them could be replaced by other types of jobs.
AI also helps banks streamline customer targeting to further increase revenue.

Morgan Stanley has warned that 20% of European bank employees could be laid off over the next five years, up from 10% predicted earlier this year.

Doubling the number of workers affected could lead to 400,000 job losses in the sector in Europe alone, all due to the impacts of artificial intelligence on the labor market.

According to a Bloomberg According to a report, generative AI tools have generated a 30% increase in productivity for banks, who now expect to reduce their operational costs between 4% and 9%.

AI will impact 400,000 jobs in the European banking sector

As we’ve seen in other industries, 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 some compliance roles, because of the way AI can automate administrative workflows.

However, Morgan Stanley’s projection does not necessarily mean that 400,000 net jobs will be lost. The entire job market is undergoing transformation, and the same is true for this sector, where some positions will be phased out and others, like data engineers, will be created.

In addition to reshaping jobs, AI could also help banks increase their revenue opportunities by improving customer targeting and delivering tailored advertisements and initiatives.

We have already learned that global giant HSBC plans to cut 20,000 jobs. Standard Chartered is also considering cutting its workforce by 8,000 people, with the CEO 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 demonstrates that AI is having much more rapid impacts on the industry than we thought, with heavy regulatory burdens that previously appeared to limit the pace of the technology.

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