After the technology sector, the banking industry is now staring at a major employment crisis due to Artificial Intelligence. A new report has warned that more than 2 lakh jobs could be lost in European banks over the next five years as AI, automation, and digital banking rapidly replace traditional roles. The biggest impact is expected on back-office, risk management, and compliance-related jobs.
This warning comes at a time when banks are already under heavy pressure from investors to cut costs and improve profitability. Earlier, millions of jobs were affected globally in the IT sector due to AI-led restructuring, and now banking appears to be the next major casualty.
Banking sector faces AI-led disruption
According to a report by Morgan Stanley, around 35 major European banks were analysed, which together employ nearly 2.12 million people. The report suggests that increasing adoption of AI, digital services, and closure of physical branches is fundamentally changing the traditional banking model.
Tasks that once required large teams are now being handled by algorithms, machine learning tools, and automated systems. As a result, workforce reduction is becoming unavoidable for many banks.
Why AI is becoming a threat to banking jobs
Morgan Stanley explains that a large portion of banking work is repetitive and data-driven in nature. Activities such as transaction monitoring, report generation, compliance checks, and large-scale data processing can now be done faster and at lower cost using AI.
Because of this, roles in back-office operations, middle-office functions, risk assessment, and compliance are at the highest risk. Banks estimate that AI-driven automation can improve operational efficiency by up to 30 percent, making human intervention less necessary in many areas.
Major banks have already started cutting staff
Some European banks have already begun restructuring. Dutch lender ABN Amro has announced plans to cut nearly 20 percent of its full-time workforce by 2028. Meanwhile, the CEO of France’s Société Générale has openly stated that no department is immune from cost-cutting measures.
Investors are pushing European banks to improve returns, especially as they lag behind US banks in profitability and growth, further accelerating job cuts.
AI brings benefits, but raises long-term concerns
While job losses are a concern, some banks see AI as a major opportunity. UBS has started using AI in innovative ways, including analyst avatars, and has even sent its senior leadership to Oxford University for AI-focused training.
