More than 200,000 European banking jobs are at risk over the next five years as banks increasingly embrace artificial intelligence and accelerate branch closures, analysts estimate, according to the FT. Morgan Stanley's forecast shows that the banking industry could cut around 10% of its workforce by 2030, as financial institutions rush to reap the savings promised by AI and move an increasing portion of operations online. The cuts are most likely to target banks' «central services» divisions – which include back-office and middle-office functions, as well as risk management and compliance roles – according to the analysis of a sample of 35 banks. In total, these institutions have approximately 2.12 million employees, which means that a 10% reduction would be equivalent to approximately 212,000 layoffs. «Many banks have indicated efficiency gains generated by AI and additional digitization of up to 30%,» says Morgan Stanley. European banks are under intense pressure from investors to find new ways to cut costs and increase return on equity, which remains consistently below that of US rivals. Financial institutions have already begun to invoke artificial intelligence as a catalyst for restructuring operations. In November, Dutch bank ABN Amro announced it would cut around a fifth of its full-time staff by 2028, while Société Générale chief executive Slawomir Krupa warned in March that «nothing is sacred» in his campaign to cut the French bank's high cost base. Morgan Stanley analysts say AI offers banks an opportunity to improve the cost-to-income ratio – a key efficiency indicator closely watched by investors – as previous rounds of cost-cutting have worn off. The forecast highlights how accelerated digitization and the adoption of artificial intelligence could reshape the European banking landscape in the coming years, particularly for consumer-oriented banks and in countries such as France and Germany, where cost/income ratios remain high. The explosive growth of AI has fueled fears of massive job losses in several industries as the technology evolves to the point where it could replace human employees. The potential of AI to transform the European banking sector is also confirmed by UBS analysts, an institution that has started using this technology to turn its analysts into avatars, sending videos of simulated bankers to clients. Jason Napier, head of European banking analysis at UBS, said: «We are already seeing changes in audit, legal and advisory, but banks are yet to deliver improved efficiency. The cost bases are high and these powerful tools have yet to be fully deployed.» «Those who still need evidence that AI will significantly change financial services should spend more time exploring the tools that are already available,» he added.
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