Morgan Stanley warns that the European banking sector could lose more than 200,000 jobs over the next four years. AI and branch closures are driving banks to make drastic staff reductions.
Investment bank Morgan Stanley expects the sector to cut around 10 percent of jobs by 2030, affecting some 200,000 employees. The analysis covers 35 European banks with a combined workforce of 2.12 million. According to the Financial Times, digitization and AI are the main drivers behind this reorganization.
The blow is felt most acutely in central services. Back office, middle office, risk management, and compliance are under pressure. But AI tools are also having a profound impact on other departments. Research by EY from 2024 shows that 90 percent of European financial institutions have now embraced AI, with further investments in generative AI systems.
Efficiency through automation
Banks are reporting significant profits from automation. Many banks have reported efficiency improvements of 30 percent thanks to AI, according to Morgan Stanley. This pressure did not come out of nowhere. Investors are demanding that banks reduce costs and improve their return on equity, which still lags behind their American competitors.
ABN Amro announced in November that it would cut a fifth of its workforce by 2028. Société Générale CEO Slawomir Krupa went even further, saying “nothing is sacred” in his campaign to cut costs. This drastic course illustrates the pressure under which European banks are operating. The European Banking Federation report points out that France and Germany, where the ratio between income and expenditure remains high, stand to benefit most from digitization.
Warnings against rushing
However, there are also cautionary voices. Conor Hillery, co-CEO of JPMorgan Chase for Europe, the Middle East, and Africa, urges caution: “We must be very careful, in this rush and excitement about AI in our banking world, that people do not lose sight of the basics and fundamentals.”
Hillery emphasizes that JPMorgan balances AI integration with thorough training of junior staff in core tasks such as building cash flow models. “Otherwise, we are creating a big problem for the future,” he warned. UBS has already experimented with AI by having analysts give video briefings to clients as avatars.
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