Many jobs are at risk.
Wall Street banks are preparing for the potential loss of up to 200,000 jobs over the next three to five years as artificial intelligence (AI) becomes more integrated into their operations. A recent report from Bloomberg Intelligence indicates that jobs in back-office, middle-office, and operations areas are particularly vulnerable to automation, as AI takes over tasks that were once performed by human workers. The study, based on feedback from technology officers at major banks, suggests that on average, banks anticipate a three percent reduction in their workforce due to AI implementation.
The effects of AI are expected to be most noticeable in roles that involve routine, repetitive tasks. While AI may not entirely replace these jobs, it is expected to lead to significant workforce changes. AI-powered tools could, for instance, transform customer service functions and impact compliance duties, such as know-your-customer processes. Despite these changes, some experts emphasize that AI will more likely augment roles rather than fully replace them, shifting the way employees perform their tasks.
The widespread adoption of AI could have a significant impact on the banking sector’s profitability. Bloomberg Intelligence estimates that banks could see a 12 to 17 percent increase in their pretax profits by 2027 due to enhanced productivity and efficiency brought about by AI. This could add up to $180 billion in combined profits for the industry. A majority of respondents in the survey believe that generative AI will drive a five percent increase in productivity and revenue over the next few years.
Although AI’s rise poses a risk to certain job functions, many banks are optimistic about its potential to enhance jobs rather than eliminate them. For instance, JPMorgan’s head of AI initiatives, Teresa Heitsenrether, noted that AI adoption so far has helped enhance roles within the company. CEO Jamie Dimon expressed a similar view, predicting that AI will improve workers’ quality of life, even if some jobs are lost in the process, suggesting that technology will lead to shorter workweeks and better healthcare outcomes in the future.
The trend toward automation and AI adoption follows years of investments by banks to modernize their IT systems and reduce operational costs. As AI tools become more advanced, banks are eager to adopt these technologies to boost efficiency, cut costs, and remain competitive in an increasingly digital financial landscape.
