European banks may cut over 200,000 jobs by 2030 because of AI: Morgan Stanley report

European banks are preparing for large-scale job cuts as artificial intelligence becomes a core part of their operations. According to a new analysis by Morgan Stanley, reported by the Financial Times, more than 200,000 banking jobs in Europe could be lost by 2030. This would amount to around 10 per cent of the workforce across 35 major European banks.

The report said banks are increasingly using AI to improve efficiency and reduce costs, while also shutting physical branches as more customers shift to digital banking.

Morgan Stanley found that job losses are likely to be highest in back-office functions, including risk management, compliance and internal operations. These roles rely heavily on data processing, document checks and reporting, tasks that AI systems can carry out faster and at a lower cost.

According to the analysis, banks expect efficiency gains of up to 30 per cent by using AI-driven tools for activities such as reviewing spreadsheets, monitoring transactions and managing regulatory requirements.

European banks are under pressure from investors to reduce costs and improve returns, which continue to lag behind their US counterparts.

Several lenders have already announced job cuts. In November, Deutsche Bank’s asset management arm DWS said it planned to cut around one-fifth of its full-time workforce by 2028. In March, Société Générale chief executive Slawomir Krupa said “nothing is sacred” as the French bank works to rein in its high cost base.

Morgan Stanley said artificial intelligence offers banks an opportunity to improve cost-to-income ratios, a key measure closely watched by investors. The report added that faster digitalisation could reshape European banking in the coming years, particularly in France and Germany, where cost pressures remain high.

Banks are also experimenting with new uses of AI. UBS has begun using the technology to create analyst avatars that send videos to clients.

Jason Napier, head of European banks research at UBS, said efficiency gains from AI are already visible in sectors such as audit, law and consulting, though banks have yet to fully realise similar benefits.

“Cost bases remain large, and these powerful new tools are still not fully implemented,” Napier told Financial Times.

As part of its AI push, UBS recently sent 250 of its most senior leaders to Oxford University for an AI-focused leadership summit, according to people familiar with the matter.

Some banking executives have urged caution. Conor Hillery, JPMorgan Chase’s co-head for Europe, the Middle East and Africa, warned against losing focus on core banking skills while adopting AI.

He said JPMorgan was trying to balance the use of AI to speed up routine tasks while ensuring junior staff continue to build essential expertise.

“Otherwise, we’re storing up a big problem for the future,” Hillery said, while speaking to Financial Times.