Global banks are expected to cut as many as 200,000 jobs in the next three to five years as artificial intelligence (AI) encroaches on tasks currently carried out by human workers, according to Bloomberg Intelligence.
Chief information and technology officers surveyed for Bloomberg Intelligence indicated that on average they expect a net 3 percent of their workforce to be cut, according to a report published on Thursday last week.
Back office, middle office and operations are likely to be most at risk, Bloomberg Intelligence senior analyst and the report’s author Tomasz Noetzel said in a message. Customer services could see changes as bots manage client functions, while know-your-customer duties would also be vulnerable. “Any jobs involving routine, repetitive tasks are at risk,” he said. “But AI will not eliminate them fully, rather it will lead to workforce transformation.”
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Nearly a quarter of the 93 respondents predict a steeper decline of between 5 percent and 10 percent of total headcount. The peer group covered by Bloomberg Intelligence includes Citigroup Inc, JPMorgan Chase & Co and Goldman Sachs Group Inc.
The findings point to far-reaching changes in the industry, feeding through to improved earnings. In 2027, banks could see pretax profits 12 percent to 17 percent higher than they would otherwise have been — adding as much as US$180 billion to their combined bottom line — as AI powers an increase in productivity, according to Bloomberg Intelligence. Eight in 10 respondents expect generative AI to increase productivity and revenue generation by at least 5 percent in the next three to five years.
Banks, which have spent years modernizing their IT systems to speed up processes and shave costs in the wake of the financial crisis, have been flocking into the new generation of AI tools that could further improve productivity.
Citi said in a report in June last year that AI is likely to displace more jobs across the banking industry than in any other sector. About 54 percent of jobs across banking have a high potential to be automated, Citi said at the time.
Still, many firms have stressed that the shift will result in roles being changed by technology, rather than replaced altogether. Teresa Heitsenrether, who oversees JPMorgan’s AI efforts, said in November last year that the bank’s adoption of generative AI was so far augmenting jobs.
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