AI tools in banking likely to eat 200,000 jobs in 5 years: Report

Global banks may cut as many as 200,000 jobs over the next five years as artificial intelligence reshapes tasks traditionally handled by humans, according to a report by Bloomberg Intelligence (BI).

Chief information and technology officers surveyed for the report projected an average 3 per cent reduction in workforce due to AI advancements.

Tomasz Noetzel, a senior analyst at BI, said back-office, middle-office, and operational roles are most at risk, with customer service and compliance areas, such as know-your-customer (KYC) duties, also vulnerable to automation.

“Any jobs involving routine, repetitive tasks are at risk,” Noetzel said.

Among the 93 respondents, nearly a quarter anticipated a steeper workforce decline of 5-10 per cent. The surveyed group included major institutions like Citigroup, JPMorgan Chase, and Goldman Sachs.

Banks likely to make gains

While AI’s rise sets the stage for disruption for workers, banks could see significant financial gains.

BI estimates that AI-driven productivity improvements could boost pretax profits by 12 per cent to 17 per cent by 2027, potentially adding up to $180 billion to the industry’s combined bottom line.

Eight in ten respondents said generative AI tools are likely to enhance productivity and revenue generation by at least 5 per cent in the coming years.

Augmentation, not elimination

However, some industry leaders are of the view that AI’s integration will augment rather than replace jobs.

Noetzel said that AI is more likely to transform roles than eliminate them entirely.

Teresa Heitsenrether, who leads JPMorgan’s AI efforts, noted in November that generative AI is being used to enhance existing roles.

JPMorgan CEO Jamie Dimon had echoed this sentiment in a 2023 interview with Bloomberg Television, acknowledging potential job losses but stressing the broader benefits of technology.