AI’s Impact: Banking Sector Faces Job Cuts After IT Industry Shake-Up

Following the technology sector, the banking industry is now bracing for a major employment crisis driven by Artificial Intelligence. A recent report warns that over 2 lakh jobs could disappear across European banks within the next five years as automation, AI tools, and digital banking replace traditional roles. The most vulnerable positions are in back-office operations, risk management, and compliance.

This development comes as banks face mounting pressure from investors to reduce costs and boost profitability. Similar to the IT sector, where millions of jobs were lost due to AI-led restructuring, banking is emerging as the next casualty of technological disruption.

📉 AI-Led Disruption in Banking

Morgan Stanley’s analysis of 35 major European banks employing 2.12 million people highlights how AI adoption, digital services, and branch closures are reshaping the traditional banking model. Tasks once requiring large teams—such as transaction monitoring, compliance checks, and data processing—are now being handled by algorithms and machine learning systems, making workforce reductions inevitable.

⚠️ Why Banking Jobs Are at Risk

Since much of banking work is repetitive and data-driven, AI can perform these tasks faster and at lower costs. Roles in back-office, middle-office, risk assessment, and compliance are most exposed. Banks estimate that automation could improve efficiency by up to 30%, reducing the need for human intervention.

🏦 Banks Already Cutting Staff

Several European banks have begun restructuring. Dutch lender ABN Amro plans to cut nearly 20% of its workforce by 2028, while France’s Société Générale has warned that no department is safe from cost-cutting. Investors are pushing for higher returns, especially as European banks lag behind US counterparts in profitability.

🌐 AI: Opportunity and Concern

Despite fears of job losses, some banks view AI as a strategic opportunity. UBS has embraced AI innovations like analyst avatars and even sent senior leaders to Oxford University for AI-focused training. While efficiency gains are clear, concerns remain about long-term employment and the human cost of automation.