The Financial Times reports that as financial institutions pursue the benefits promised by AI, close bank branches and push more of their operations online through digital transformation, banking jobs across Europe are under threat. Morgan Stanley analysis of 35 lenders reveals that cuts will likely come from 'central services' divisions such as back- and middle-office roles, as well as risk management and compliance positions. While European lenders struggle to meet investor demands, cut costs and boost returns, Morgan Stanley research finds that banks attribute up to 30% in efficiency gains from AI and digitalisation. AI continues to be referenced as a reason to restructure operations and an opportunity to improve cost-to-income ratios. The Morgan Stanley forecast highlights that greater digitalisation and adoption of AI would overhaul the European banking ecosystem over the next four years, particularly across consumer-focused lenders and in countries such as France and Germany where banks' cost-to-income ratios remain high. As a result, the expansion of AI adoption and accompanying fears of widespread job losses persist, resulting in predictions - like Morgan Stanley's - where hundreds of thousands of jobs are expected to be lost. This sentiment was echoed by Bank of England governor Andrew Bailey who recently agreed that AI will likely displace people from jobs but would not cause mass unemployment. Bloomberg Intelligence also predicted in January 2025 that global banks will cut as many as 200,000 jobs in the next three to five years. The accelerating push toward AI‑driven efficiency leaves Europe’s banks facing a clear trade‑off: meet investor demands for lower costs, or grapple with the societal impact of widespread staff reductions. As back‑ and middle‑office roles come under pressure, the industry must confront whether it can modernise at the pace it wants without triggering deeper concerns about workforce stability. At the same time, the scale of predicted job losses raises questions about operational resilience. Cutting too deeply into risk, compliance, and support functions could expose banks to new vulnerabilities just as digital transformation ramps up. The challenge now is whether European lenders can pursue AI‑enabled efficiency while maintaining the expertise and trust that underpin the sector.
By on 2026-01-02 08:00:00
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