- Key insight: Data is starting to show where AI is eating jobs, and operations, data analysis and customer support are vulnerable.
- Supporting data: At JPMorganChase, the number of operations and support staff decreased by 4% and 2%, respectively.
- Forward look: Experts expect banks to cut back on their use of outsourcing and offshoring, where work is often repeatable and there are clear performance metrics.
Though AI spending and hiring data shows that in general,
Back-office and operations roles appear to be the most vulnerable. Standard Chartered announced plans to cut 7,800 back-office roles by 2030 as it scales up automation. Data shows operations is the only job category failing to see headcount growth among companies that heavily adopt AI. Repetitive, manual tasks such as reconciling failed equity trades or handling new account paperwork and IPO filings are prime targets for AI displacement.
Support functions, such as credit-card call-center jobs, are shifting toward virtual AI assistants. And outsourced and offshore jobs are at risk because routine tasks with clear performance metrics are a strong fit for AI.
Young, highly educated workers can pivot to roles that require AI skills, such as prompt engineers and model validators and testers.
"I worry about the people who are mid-career, whose job is largely going to be replaced by AI," said Jeff McMillan, principal of McMillanAI and until February, head of firm-wide AI at Morgan Stanley. "What is unclear to me is: What is the path for that person to reinvent him or herself for the next 20 years in their career? As individuals, we can't wait for somebody to figure that out for us, we have to ourselves start to engage in this conversation."
Operations and support
The back office — where employees execute, clear and settle transactions and trades, process loans and manage accounts — appears to be the department most vulnerable to hiring freezes and cutbacks. Ramp, a fintech provider of corporate cards and automated spend management software, and Revelio Labs, an aggregator of workforce data, recently analyzed AI spending data from 21,559 U.S. companies' card and bill pay data against those companies' personnel records. They found that operations was the only job category that failed to see headcount growth among firms making heavy AI investments.
In May, Standard Chartered announced plans to cut 7,800 back-office roles over the next four years as it scales up automation. "It's not about cost-cutting, though that will be the result for sure," CEO Bill Winters told Bloomberg at the time. "It's about having a structurally more productive environment that is fit for the future."
JPMorganChase CEO Jamie Dimon told investors in February that his bank has already displaced workers because of AI, and though the bank's head count stayed flat at around 318,500, the size of its operations and support staff fell by 4% and 2%, respectively, while client-facing, revenue-generating roles grew by 4%.
Similar job cuts and freezes are happening across the financial industry, according to Carissa Robb, managing partner at SolomonEdwards.
"The positions that are more task-oriented, where we are pushing a widget, are benefiting at a faster pace from automation, and so that makes sense [for] some of the operational or support roles," Robb said in an American Banker podcast that will air July 21. And the use of AI in payments brings self-service efficiencies that mean fewer call-center support staff are needed, she said. Similarly, the use of AI in underwriting reduces the need for loan analysts.
"Where there are consistent guardrails, processes, repetitive behavior, that certainly makes sense, that is the point," Robb said. "We want to introduce operational efficiencies for those value-added positions, but in a more automated and scaled way."
Robb also observed that many of the people in customer-facing roles today started in operations jobs that have been eliminated, meaning that opportunity to learn the business is going away.
"How much of that workforce was created and became successful in revenue-generating or customer-interacting positions because they had the opportunity to move through the operational and back-office support model?" she said. "That's where I think we need to pay attention to what we need to do differently to create that profile as we start to reduce the exposure and the knowledge base of how the widget moves in the beginning."
Wells Fargo reduced its headcount by 4,199 jobs in the first quarter. "We're increasing our investments in areas like technology, including AI, as well as in advertising, while continuing to execute on our efficiency initiatives, which has resulted in 23 consecutive quarters of headcount reductions," CEO Charles Scharf said during the company's first-quarter earnings call. He didn't say which roles were being eliminated.
Also during the first quarter, Citi cut 2,000 staff members, and Bank of America eliminated 1,073 roles. Both banks have cited their employees' increasing use of AI.
Junior analysts and other entry level staff
Junior analysts, who collect and analyze financial data, prepare reports and assist with risk assessments, also appear to be at risk.
"Banks are cutting junior analyst classes by as much as two-thirds while sourcing roughly 62% of their AI talent from those same cohorts," Debasish Patnaik, senior partner and leader of QuantumBlack, McKinsey's AI consulting arm, told
At the Cisco AI Summit in January, Goldman Sachs CEO David Solomon said AI can create 95% of an S-1 filing, the form a company files with the Securities and Exchange Commission when it goes public, in just a few minutes. This work is typically done by junior analysts as well as lawyers.
This is part of a broader emerging trend of banks hiring fewer entry-level workers, according to Morgan Stanley Research Economist Diego Anzoategui.
"So far, the data suggest early, narrow displacement — more visible among younger workers — while overall disruption remains limited," Anzoategui wrote in a
Outsourcing
Experts expect AI to drive down banks' use of outsourcing and offshore workers.
"What makes for a good AI project is it's well-defined with clear key performance indicators, and you can monitor it," McMillan said. "Every single thing that goes to India meets that criteria. It's less painful because you're not having to eliminate your own people.
"No bank wants to fire people, they just don't," he said. "There's a perception of 'margin, margin, margin,' but there are so many disincentives to fire people because it just creates noise and depression. I advise people to go after outsourcing work, because it's so much easier to automate that."
