AI to shake up banking putting thousands of jobs at risk

The global banking industry is bracing for a seismic shift as artificial intelligence (AI) continues to revolutionize the sector. A recent study by Bloomberg Intelligence predicts that up to 200,000 jobs in banking will be eliminated over the next three to five years as AI takes over tasks currently performed by employees.

The cuts are expected to impact around 3% of the workforce, according to bank technology chiefs surveyed. Jobs in back-office operations (handling transactions), middle-office roles (monitoring financial risks and managing returns), and operations departments are most at risk.

Customer service roles are also vulnerable as AI-powered chatbots increasingly handle routine inquiries and tasks, while positions related to banks' regulatory obligations, such as know-your-customer (KYC) processes, could face automation as well.

Reshaping, Not Replacing, the Workforce
“Any jobs involving repetitive routine tasks are at risk. But AI will not wipe them out entirely. Instead, it will reshape the workforce,” says Thomas Noetzel, an analyst at Bloomberg Intelligence.

A portion of industry leaders expects even steeper cuts, predicting workforce reductions of 5% to 10% as banks adopt AI tools to streamline operations.

Boosting Productivity and Profitability

The adoption of AI is not just about cost-cutting but also improving productivity and profitability. Eight in ten surveyed experts believe AI will enhance productivity and revenue generation by at least 5% in the next three to five years.

The potential financial benefits are significant. Banks could see pre-tax profits increase by 12% to 17% by 2027, adding up to a collective gain of $180 billion.

AI in Action

Major banks, including JPMorgan, Citigroup, and Goldman Sachs, have been modernizing their IT systems since the financial crisis to streamline processes and cut costs. Now, AI tools are the next step in improving efficiency and creating smarter workflows.

A Citigroup report suggests that banking could see more job automation than any other industry, with 54% of positions having a high potential for automation.

A Transformative Era

The banking industry is entering a transformative era, where AI will not only redefine workflows but also boost financial performance. While the workforce faces challenges, the technology promises opportunities for growth, efficiency, and innovation.

For employees and institutions alike, adaptation will be key as the industry navigates these sweeping changes.