If you work in banking, your job security may have recently been called into question.
Morgan Stanley has projected that more than 200,000 European banking jobs could disappear by 2030, warning that artificial intelligence and rapid digitalisation are set to transform the sector in ways not seen for decades, according to a report by the Economic Times.
The analysis, which covers 35 major European lenders employing approximately 2.12 million staff, suggests that banks could reduce their workforce by around 10% within the next five years. This would equate to approximately 212,000 jobs lost across the continent.
For employees in certain areas, the outlook appears particularly bleak.
Which Roles Are Most at Risk?
Morgan Stanley's analysis indicates that job losses are expected to hit 'central services' divisions hardest. These include back-office and middle-office functions, as well as risk management and compliance positions.
The rationale is clear: these roles involve tasks that AI systems can perform more quickly and at lower cost. Monitoring transactions, preparing regulatory reports, and processing large datasets are prime candidates for automation through machine learning tools.
'Many banks have quoted efficiency gains coming from AI and further digitalisation to the tune of 30%,' Morgan Stanley noted in its report.
For workers whose daily responsibilities involve spreadsheets, regulatory checks, and data reconciliation, the implications are stark.
Banks Already Acting on AI Strategies
This forecast is not merely hypothetical. Several European lenders have already begun restructuring with artificial intelligence at the core of their cost-cutting strategies.
In November, Dutch lender ABN Amro announced plans to reduce around one-fifth of its full-time workforce by 2028, according to the Economic Times. The bank has identified AI as increasingly capable of handling tasks currently performed by staff, particularly in operations and compliance functions.
Similarly, in France, Société Générale's chief executive Slawomir Krupa has taken an assertive stance. 'Nothing is sacred', he declared in March, signalling that no division would be exempt from his drive to lower the bank's persistently high costs.
Why the Urgency? Investor Pressure Intensifies
This push towards automation is driven by mounting pressure from shareholders frustrated with European banks' persistently weak returns on equity, especially in comparison with their American counterparts.
Morgan Stanley analysts highlighted that AI offers lenders a new opportunity to improve their cost-to-income ratios—an important efficiency metric closely scrutinised by investors—particularly as traditional cost-cutting measures have 'largely run out of momentum.'
The forecast underscores how increased digitalisation could significantly reshape Europe's banking landscape in the coming years, especially among consumer-focused lenders and in countries like France and Germany, where cost-to-income ratios remain relatively high.
Senior Bankers Urge Caution
Despite the sector-wide push for AI-driven efficiencies, some senior figures within banking are urging restraint.
Conor Hillery, JPMorgan Chase's co-chief executive for Europe, the Middle East and Africa, warned against abandoning fundamental skills in the rush to automate. He emphasised that JPMorgan aims to balance AI utilisation—speeding up routine tasks—while ensuring junior staff continue to develop vital skills such as building cash-flow models and analysing price-to-earnings ratios.
'Otherwise, we're storing up a big problem for the future,' Hillery cautioned, according to the Economic Times.
Jason Napier, head of European banks research at UBS, acknowledged that efficiency gains from AI are already evident in sectors such as audit, law, and consulting. However, he noted that banks have yet to fully realise similar benefits. 'Cost bases remain large, and these powerful new tools are still not fully implemented,' he said.
UBS has already begun experimenting with AI-generated content, producing analyst avatars that deliver video updates to clients. The Swiss bank recently sent 250 of its senior leaders to Oxford University for an AI-focused leadership summit.
What Does This Mean for Banking Employees?
For the 2.12 million people currently employed by Europe's major banks, the next four to five years will likely require adaptation—whether through retraining for higher-value roles, transitioning to emerging functions, or exiting the industry altogether.
Morgan Stanley's message is clear: the era of AI-driven banking has arrived, and not everyone will be able to keep pace.
Originally published on IBTimes UK
