More than 200,000 European banking jobs are under threat over the next five years as lenders increasingly embrace artificial intelligence (AI) and close branches, analysts have estimated.

The forecast from Morgan Stanley that the industry could cut one in 10 jobs by 2030 comes as banks are rushing to secure the savings promised by AI while also moving more operations online.

Cuts are most likely to come from within banks’ “central services” divisions, which include back- and middle-office roles as well as risk management and compliance positions, according to the analysis of 35 lenders.

Together, the banks employ about 2.12 million staff, meaning that a 10 per cent reduction would result in about 212,000 job cuts.

“Many banks have quoted efficiency gains coming from AI and further digitalisation to the tune of 30 per cent,” Morgan Stanley said.

Europe’s lenders have come under intense pressure from investors to find new ways to cut costs and boost returns on equity that persistently lag behind their US rivals.

Banks have already started to cite AI as a catalyst for restructuring their operations.

In November, Dutch lender ABN Amro said it would axe about a fifth of its full-time staff by 2028, while Société Générale chief executive Slawomir Krupa warned in March that “nothing is sacred” in his campaign to reduce the French lender’s stubbornly high cost base.

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Morgan Stanley’s analysts said AI offered banks an opportunity to improve their cost-to-income ratios – a critical measure of efficiency for lenders tracked by investors – as previous rounds of cost-cutting have run out of steam.

The forecast underlines how greater digitalisation and adoption of AI could shake up Europe’s banking landscape in the coming years, especially at consumer-focused lenders and in countries such as France and Germany, where banks’ cost-to-income ratios remain high.

The growth of AI has sparked fears of widespread job losses across several industries as the technology develops to the point where it could supplant employees.

The potential for AI to reshape Europe’s banking industry was echoed by analysts at UBS, which has started using the technology to turn its analysts into avatars, sending videos of the simulated bankers to clients.

“We can already see industry changes in audit, law and consulting, but banks aren’t delivering improved efficiency yet,” Jason Napier, head of European banks research at UBS, said.

“Cost bases are large … and these new powerful tools are yet to be fully implemented.

“Those who still need convincing that AI will significantly change financial services should spend more time exploring the tools which are already available.”

UBS sent its 250 most senior leaders to Oxford University for an AI “leadership summit” in recent months.

But as lenders face pressure to extract savings from AI, some leading bankers in Europe have cautioned against rushing to integrate the technology.

“The one thing we have to be very careful about – in this rush and excitement about AI in our world of banking – is that people don’t lose an understanding of the basics and fundamentals,” said Conor Hillery, the Dubliner who is JPMorgan Chase’s co-chief executive of Europe, Middle East and Africa.

He said JPMorgan was trying to strike a balance between using AI to expedite basic functions and making sure its junior staff were still properly trained in core tasks such as constructing cash flow models and price-to-earnings ratios.

“Otherwise, we’re storing up a big problem for the future,” Mr Hillery said. – Copyright The Financial Times Limited 2025