Banks prepare mass workforce reductions as AI adoption reshapes finance industry careers

Banks lay groundwork for mass workforce cuts as AI takes hold | Fortune

In the hope he'll land a job in finance, Andre Bonnick spends hours rehearsing what he's going to say. He's using key words from job listings, making eye contact -- following advice he's gotten from recruiters. But Bonnick, a student at Warwick University, isn't preparing to talk to a human hiring manager. He's tackling initial screening rounds done by artificial intelligence-powered software. With more firms adopting AI, students gunning for a career in banking and finance are preparing to be up against such technology at first interaction. If they get in the door, they're then faced with the question of whether the jobs will be available to humans in the next few years. Most executives are in agreement: Jobs will be cut as AI is implemented. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said in December that the technology "will eliminate jobs." Jane Fraser, Citigroup Inc.'s CEO, said some jobs "will no longer be required," while Goldman Sachs Group Inc. President John Waldron referred to employees as a "human assembly line" ripe for automation. As Standard Chartered Plc CEO Bill Winters put it: "It's not cost cutting; it's replacing in some cases lower-value human capital with the financial capital and the investment capital we're putting in." (He later apologized for his remarks.) With those recent comments, industry workers have been left dazed about whether their jobs are safe. Even for those in higher levels, the risk that AI could eventually replace their roles has grown. And while executives, including Dimon and Barclays Plc Chief Executive Officer CS Venkatakrishnan, have talked about retraining and reskilling employees to protect some jobs, it's unclear how that would work in practice, said David Parsons, an employment lawyer at Mishcon de Reya. One investment banker in the United Arab Emirates, who asked not to be identified, joked he may not be needed in the next five to 10 years, after he used Microsoft Corp.'s Copilot to help make a last-minute elevator pitch before a client meeting. "It's fair to say middle office is vulnerable," Parsons said. "That's the difference with this wave of automation, it impacts jobs higher up the chain." Students, who for years gravitated to finance for its stability and high-paying nature, are now finding less entry-level roles available to them. "I was looking at potentially applying for a master's to give me another year to apply for jobs," Bonnick said. Banks are cutting junior analyst classes by as much as two-thirds while sourcing roughly 62% of their AI talent from those same cohorts, said Debasish Patnaik, senior partner and leader of QuantumBlack, McKinsey & Co.'s AI consulting arm. While graduate intakes "will shrink," banks are unlikely to shed them altogether, according to Patnaik. "Banking is an apprenticeship business. Today's junior analysts become tomorrow's managing directors," said Patnaik. "Senior judgment cannot be manufactured laterally." Targeted Use Cases By and large, banks are currently trying to implement AI across certain functions, including customer service and transaction and trade monitoring. "Rather than looking for the Battleship Galactica, all singing, all dancing bank run by agentic AI, we're going to see much more single point use cases over the over the coming years," said Antony Jenkins, a former CEO of Barclays and founder of consultancy 10x Banking Technologies Ltd. Citigroup is rolling out a conversational AI-powered wealth management avatar that offers clients financial guidance. The multilingual avatar can advise on what to do when your bank certificates of deposit are maturing, for example, or how to manage your children's college fund. Barclays is using AI to monitor calls involving human customer service staff, which is helping to improve efficiency without putting jobs at risk, Venkatakrishnan said earlier this year. The firm saidin February that it had seen efficiency gains with more than 8 million customer calls summarized by generative AI since the program rolled out in October. Digital bank Revolut Ltd. recently launched an in-app AI assistant called AIR that gives customers a granular breakdown of spend, sorting travel and essentials or setting card controls. It's designed to make financial management "as easy and natural as sending a text," said Julia Ponomareva, Revolut's partner and general manager of customer experience and AI products. In terms of hiring and interviewing functions, some recruiters think banks won't lean on AI. While Bonnick, the student at Warwick, may be preparing to speak to an AI bot in screening interviews, banks are unlikely to use such technology because the risks are significant, according to Tom Lakin, global head of future of work at recruitment firm Robert Walters. At least one screening software company removed a facial analysis component in 2021, he added. Separately, some remain wary of the consequences of redundancies across certain functions. "If you are laying off a large number of your junior workforce, or laying off administrative staff who are predominantly female, there are huge discrimination risks," Parsons said. "It's an underpriced risk." There's also doubts over whether many of the job cut announcements so far have truly been related to AI. "I think a lot of companies have too much bureaucracy and they may use AI to cover up the fact that they should never have hired those people in the first place," Dimon said at JPMorgan's China summit in May. For many, AI has been touted as a way to bypass grunt work. Still, presentation decks and valuation models are broadly accepted as a necessary learning tool. Graduates broadly speaking are finding it difficult to break into the sector, said Timothy Lee, a student at Warwick University who leads its business and finance society. "Before Covid, class sizes were increasing a lot," Lee said, though he has accepted a job from Wells Fargo & Co. "When banks were doing well, they were hiring more but now they don't need to." To be sure, some banks are pressing ahead with plans to hire interns and new employees. Bank of America Corp. is committed to the 2,000 summer interns and another 2,000 full-time recruits set to join this month across eight lines of business. Still, the bank wants headcount to stay flat and using AI to encourage efficiency.

Bank Workers Feel Unmoored as CEOs Talk AI-Related Cuts | PYMNTS.com

That's according to a report Sunday (June 7) from Bloomberg News, which says that feeling extends to people in higher-level jobs, who increasingly feel that AI could replace them. The report quoted an investment banker in the United Arab Emirates, who asked not to be identified, who joked he may not be needed in the next five to 10 years, after he used Microsoft's Copilot AI tool for an elevator pitch ahead of a client meeting. Meanwhile, students who had for years turned to the financial world for its stability and generous salaries, are now finding it harder to get a foot in the door, Bloomberg added. "I was looking at potentially applying for a master's to give me another year to apply for jobs," Andre Bonnick, a student at Warwick University. Although some executives have discussed retraining workers to protect their jobs, it's not clear how that might play out in practice, David Parsons, an employment lawyer at Mishcon de Reya, told Bloomberg. "It's fair to say middle office is vulnerable," Parsons said. "That's the difference with this wave of automation, it impacts jobs higher up the chain." He added that there could be consequences to sweeping layoffs if, for example, a banking cuts predominantly female administrative staff, or vast numbers of junior workers. In those cases, "there are huge discrimination risks," Parsons said. "It's an underpriced risk." Bloomberg also noted that there are doubts about whether many of the layoff announcements thus far are actually about AI. "I think a lot of companies have too much bureaucracy and they may use AI to cover up the fact that they should never have hired those people in the first place," JPMorgan CEO Jamie Dimon said at the bank's China summit last month. In other news from the intersection of AI and banking, recent PYMNTS Intelligence finds that credit unions who are deploying the technology outdo their peers in areas like member growth and asset accumulation. At the same time, institutions slower to modernize are beginning to demonstrate signs of marked member attrition. "That dynamic reframes the industry's digital transformation debate. For years, financial institutions discussed AI largely through the lens of operational efficiency, such as automating workflows, reducing support costs and improving fraud detection," PYMNTS wrote. "The new findings point to something more consequential. AI is emerging as customer infrastructure. Generation Z respondents were 73% more likely than the average consumer to want AI-powered financial advice."