Global Banks May Slash 200,000 Jobs as AI Reshapes the Workforce
The financial industry is poised for a transformative shift as artificial intelligence (AI) begins to replace roles traditionally handled by human workers. According to a Bloomberg Intelligence (BI) report, global banks could eliminate up to 200,000 wall street jobs in the next three to five years as AI technology reshapes operations and increases efficiency.
Job Reductions on the Horizon
A survey of chief information and technology officers by BI revealed that banks anticipate an average reduction of 3% in their workforce, including Wall Street Jobs. Back-office, middle-office, and operational roles are expected to bear the brunt of these changes, while customer service functions and compliance tasks like know-your-customer (KYC) processes could increasingly shift to AI-driven bots.
BI Senior Analyst Tomasz Noetzel emphasized that while AI will significantly alter the workforce, it will not entirely eliminate jobs. Instead, it will lead to a transformation of roles, with routine and repetitive tasks being automated to enhance productivity. Nearly 25% of the 93 respondents foresee a more substantial workforce reduction, estimating a decline of 5% to 10%.
Profit Growth Fueled by AI
The adoption of AI tools is projected to bring substantial financial benefits to the banking sector. By 2027, pre-tax profits across banks could rise by 12% to 17%, potentially adding $180 billion to their combined earnings. Generative AI is expected to boost productivity and revenue by at least 5% in the coming years, according to 80% of the survey respondents.
Banks have been modernizing IT systems for over a decade to streamline processes and reduce costs following the financial crisis. The integration of next-generation AI tools is the latest step in this evolution, promising further enhancements in operational efficiency.
Workforce Transformation
While Citi’s June report predicted that banking would be the industry most affected by AI displacement, with 54% of roles at high risk of automation, many firms stress that technology will augment rather than completely replace jobs. JPMorgan Chase & Co.’s Teresa Heitsenrether highlighted that AI adoption at the bank has so far complemented existing roles rather than eliminating them outright.
JPMorgan CEO Jamie Dimon has echoed this sentiment, pointing to the potential for AI to improve quality of life, despite its impact on certain positions. Speaking in 2023, Dimon predicted that AI would lead to groundbreaking advancements, including better work-life balance and medical breakthroughs.
The banking sector’s embrace of AI reflects broader trends in technology-driven transformation. While job losses are a concern, the focus remains on leveraging AI to drive innovation, enhance productivity, and create a more efficient workforce. The shift underscores the need for strategic planning to manage workforce transitions and equip employees with the skills required for the AI era.
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