- Morgan Stanley has doubled its projection: 20% (up from 10%) could lose their jobs
- There are 400,000 European jobs, although many could be replaced by other types of work.
- AI is also helping banks optimize customer targeting to further increase revenue.
Morgan Stanley has warned that 20% of European banking workers could be laid off in the next five years, up from its previous projection of 10% earlier this year.
Doubling the number of workers affected could lead to the loss of 400,000 jobs across the sector in Europe alone, all as a result of the impact of artificial intelligence on the labor market.
According to a Bloomberg According to the report, generative AI tools have generated a 30% increase in productivity for banks, which now expect to reduce operating costs by 4% to 9%.
AI will affect 400,000 European banking jobs
As we’ve seen in other sectors, it will be the lower-paid, entry-level jobs that are most likely to be affected, including back-office processing, middle-office risk monitoring and certain compliance roles, due to the way AI can automate back-office workflows.
However, Morgan Stanley’s projection does not necessarily mean that 400,000 net jobs will be lost. The entire job market is undergoing a transformation, and the same is true for this sector, where some roles will be eliminated completely and others, such as data engineers, will be created.
In addition to reshaping jobs, AI could also help banks increase revenue opportunities by improving customer targeting and delivering personalized ads and initiatives.
We have already heard that global giant HSBC is considering cutting 20,000 jobs. Standard Chartered is also planning to reduce its workforce by 8,000, with the chief executive 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 impacts on the industry much faster than we thought, and that heavy regulatory burdens were previously thought to have been limiting the pace of the technology.
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