Stanley has an artificial intelligence (AI)-led layoff ‘warning’ for employees of European banks. In a research note, the American bank has predicted that AI could help European banks achieve productivity gains of around 30%, potentially resulting in job cuts of up to 20% over the next five years.Morgan Stanley’s team of analysts, led by Giulia Miotto, believes that the growing adoption of AI across banking operations could significantly reduce workforce requirements in the “shorter term.” The note said many of the expected reductions may occur through voluntary exits, including retirements, according to a Bloomberg report.The analysts estimated that banks could reduce headcount by 10% to 20% while generating cost savings of 4% to 9%.Apart from reducing operational costs, Morgan Stanley analysts said AI may also help banks increase revenue opportunities. According to the note, AI tools could improve customer targeting by helping lenders determine which financial products are more suitable for specific users.The analysts added that banks with integrated retail banking, savings, insurance and wealth management platforms are likely to benefit more from these capabilities as AI adoption expands across the sector.
How European banks are already exploring AI-led restructuring
Several European banks have already acknowledged that AI is likely to reshape parts of their workforce, the report adds.Standard Chartered recently said it plans to remove nearly 8,000 support roles over the next four years and linked the decision to AI adoption. CEO Bill Winters said the move would affect “lower-value human capital,” though he later apologised for the wording.Meanwhile, HSBC is reportedly considering cutting around 20,000 jobs, based on the expectation that AI could help streamline middle- and back-office functions.Commerzbank CEO Bettina Orlopp also said last week that AI could contribute to cost savings worth approximately €350 million over the next few years.