Wall Street Job Losses May Top 200,000 as AI Replaces Roles

(Bloomberg) — Global banks will cut up to 200,000 jobs over the next three to five years as artificial intelligence encroaches on jobs currently performed by human workers, according to Bloomberg Intelligence.

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Chief Information and Technology Officers surveyed for BI indicated that on average they expect a net 3% of their workforce to be cut, according to a report published Thursday.

Back office, middle office and operations are probably most at risk, according to Tomasz Noetzel, the BI senior analyst who wrote the report. Customer services may see changes as bots manage customer functions, while your customer knowledge functions will also be vulnerable. “Any jobs that involve routine and repetitive tasks are at risk,” he said. “But AI will not eliminate them completely, rather it will lead to the transformation of the workforce.”

Almost a quarter of the 93 respondents predict a sharper decline between 5% and 10% of the total period. The peer group covered by BI includes Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc.

The findings indicate far-reaching changes in the industry, fueling better earnings. By 2027, banks could see pretax profits 12% to 17% higher than they otherwise would have been — adding as much as $180 billion to their combined bottom line — as AI enables an increase in productivity, according to BI. Eight in ten respondents expect generative AI to increase productivity and revenue generation by at least 5% over the next three to five years.

Banks, which spent years modernizing their IT systems to speed up processes and reduce costs in the wake of the financial crisis, are flocking to the new generation of AI tools that could improve productivity.

Citi said in a report in June that AI is likely to replace more jobs in the banking industry than in any other sector. About 54% of jobs across the bank have a high potential to be automated, Citi said at the time.

However, many companies have stressed that the change will result in roles being changed by technology, rather than being replaced altogether. Teresa Heitsenrether, who oversees JPMorgan’s AI efforts, said in November that the bank’s adoption of generative AI was so far increasing jobs.

Jamie Dimon, chief executive of JPMorgan, told Bloomberg Television in 2023 that AI is likely to have a dramatic improvement in the quality of life of workers, even if it eliminates some positions. “Your children will live to be 100 years old and not have cancer because of technology,” Dimon said at the time. “And they literally have to work probably three and a half days a week.”

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