European banks plan up to 200,000 job cuts as AI reshapes the sector

Europe’s banking sector is preparing for sweeping job losses as artificial intelligence accelerates efforts to cut costs and boost efficiency, with more than 200,000 roles at risk by the end of the decade, according to a Morgan Stanley analysis reported by the Financial Times. The report said the cuts would amount to roughly 10 per cent of the workforce across 35 major European banks, driven by increased automation and the closure of physical branches.

The reductions are expected to fall most heavily on back-office functions, including risk management and compliance, where banks believe algorithms can process data and perform routine tasks more quickly and accurately than human staff, the analysis stated. Morgan Stanley estimated that lenders could achieve efficiency gains of as much as 30 per cent as AI becomes more deeply embedded in operations, the Financial Times reported.

The trend is not limited to Europe. Goldman Sachs warned U.S. employees in October of impending job cuts and a hiring freeze through the end of 2025 as part of its AI-led strategy known as OneGS 3.0, which is targeting functions ranging from client onboarding to regulatory reporting, according to previous disclosures.

Several European banks have already outlined concrete plans. Dutch lender ABN Amro has informed that it intends to cut around one-fifth of its workforce by 2028, while Société Générale’s chief executive has stated that no area of the business is exempt from scrutiny as automation advances. At the same time, some industry leaders have urged restraint, with a JPMorgan Chase executive telling the Financial Times that excessive reliance on automation could weaken the development of junior bankers if they fail to learn core skills, potentially creating longer-term risks for the industry.