The global banking sector is predicted to experience significant job cuts amid the rising interest in artificial intelligence (AI) and its growing efficiency.
Up to 200,000 jobs could be lost in the next three to five years, according to a Bloomberg Intelligence (BI) report published on Thursday.
The report estimated that tasks that were traditionally performed by people are already been done by AI.
The report, based on a survey of chief information and technology officers, predicts a 3% reduction in the workforce.
However, almost a quarter of respondents expect even steeper declines to 5% or even 10%.
Citigroup, JPMorgan Chase & Co., and Goldman Sachs Group are some of the companies expected to be affected.
Back office, middle office and operational roles are identified as the most vulnerable with routine and repetitive tasks being the primary targets for automation.
Customer service functions are also expected to change as AI-driven bots increasingly handle client interactions.
Know-your-customer tasks are similarly at risk of being automated.
“Any jobs involving routine, repetitive tasks are at risk,” said Tomasz Noetzel, a senior analyst at BI.
Noetzel, however, added that AI would not entirely eliminate these positions but instead lead to the transformation of the workforce.
The adoption of AI is also expected to increase financial benefits as AI tools are projected to boost productivity and enhance revenue generation by at least 5% within the next few years.
By 2027, banks could see pretax profits rise by as much as $180 billion, representing a 12% to 17% improvement over baseline projections.
In June, Citi said the banking industry is particularly susceptible to automation and that about 54% of jobs in the sector have a high potential for automation.
Despite the anticipated reductions, many firms have said AI will primarily reshape roles rather than replace them.
Teresa Heitsenrether, who oversees AI efforts at JPMorgan, stated in November that generative AI has so far been used to augment jobs rather than eliminate them.
JPMorgan CEO Jamie Dimon also expressed optimism about the transformative potential of AI, stating in a 2023 interview with Bloomberg Television that technology could improve quality of life even as it disrupts certain jobs.
“Your children are going to live to 100 and not have cancer because of technology,” Dimon said. “And literally they’ll probably be working three-and-a-half days a week.”
