Banks lay the groundwork for mass layoffs as AI becomes more widespread

[LONDON] Andre Bonnick spends hours rehearsing what he will say in hopes of landing a job in the financial industry. He follows the advice he got from the recruiter, uses job listing keywords, and makes eye contact.

But Bonnick, a student at the University of Warwick, isn’t ready to talk to a human recruiter. He works on initial reviews conducted by software powered by artificial intelligence.

As more companies adopt AI, students pursuing careers in banking and finance are preparing to confront these technologies during their first interactions. Once they get their foot in the door, they’ll be faced with the question of whether the job will be given to a human in the next few years.

Most executives agree that the introduction of AI will reduce jobs. JPMorgan Chase CEO Jamie Dimon said in December that the technology “will eliminate jobs.” Citigroup CEO Jane Fraser said some jobs “will no longer be needed,” and Goldman Sachs Group Inc. President John Waldron called workers a “human assembly line” ripe for automation.

“This isn’t about cutting costs; it’s about replacing potentially low-value human capital with the financial and investment capital that we’re putting in,” Standard Chartered CEO Bill Winters said. (He later apologized for his remarks.)

These recent comments have left industry employees stunned as to whether their jobs are safe. There is a growing risk that AI could eventually replace the roles of even higher-level people.

Dimon and Barclays CEO CS Venkatakrishnan and other executives have also talked about retraining and reskilling employees to save some jobs, but it’s unclear how that would work in practice, said David Parsons, an employment lawyer at Mishcon de Reya.

An investment banker in the United Arab Emirates, who asked not to be named, joked that he used Microsoft’s CoPilot to help with last-minute elevator pitches before client meetings and might not need it for the next five to 10 years.

“It’s no exaggeration to say that the middle office is vulnerable,” Parsons said. “That’s the difference with this wave of automation, which impacts jobs up the chain.”

Students have been drawn to fundraising for years for its stability and high pay, but now fewer entry-level roles are available to them. “I was considering getting a master’s degree to give me another year to look for a job,” Bonnick said.

Banks are cutting junior analyst classes by up to two-thirds while sourcing about 62% of their AI talent from the same pool, said Debashish Patnaik, senior partner and leader of Quantum Black, McKinsey & Company’s AI consulting arm.

Patnaik said that although graduate student intake will be “shrinked,” banks are unlikely to cut back on graduate student intake completely. “Banking is an apprenticeship business. Today’s young analysts are tomorrow’s managing directors,” Patnaik said. “You can’t falsify a higher-level decision from the side.”

Target use case

Broadly speaking, banks are now looking to deploy AI across specific functions, such as customer service, transactions and transaction monitoring.

“Instead of searching for battlestar galacticaWith an all-singing, all-dancing bank run by agent AI, there will be many more single-point use cases in the coming years,” said Antony Jenkins, former CEO of Barclays and founder of consultancy 10x Banking Technologies.

Citigroup is rolling out a conversational AI-powered wealth management avatar that provides financial guidance to customers. A multilingual avatar can, for example, advise you on what to do when a bank certificate of deposit approaches maturity or how to manage your child’s college funds.

Venkatakrishnan said earlier this year that Barclays is using AI to monitor calls involving human customer service staff, increasing efficiency without putting jobs at risk. The company announced in February that since rolling out the program in October, it has seen efficiency gains in more than 8 million customer calls summarized by generative AI.

Digital bank Revolut recently launched an in-app AI assistant called AIR. It provides customers with a detailed breakdown of their spending, including categorizing travel and essentials and setting up card management.

It’s designed to make managing your finances “as easy and natural as sending a text,” said Julia Ponomareva, partner and general manager of customer experience and AI products at Revolut.

Some recruiters believe that banks will not rely on AI for recruiting and interviewing functions.

Warwick University student Bonnick may be preparing to speak to an AI bot during a selection interview, but Tom Lakin, global head of future jobs at recruitment agency Robert Walters, says banks are unlikely to use such technology because of the risks. At least one screening software company removed facial analysis components in 2021, he added.

Separately, some remain wary of the implications of redundancy across certain functions.

“If you lay off a large number of junior employees, or lay off a predominantly female administrative staff, there is a huge risk of discrimination,” Parsons said. “It’s an underestimated risk.”

avoid the hassle

There is also the question of whether many of the workforce reduction announcements to date were really related to AI.

“Many companies have so much bureaucracy that I think they’re using AI to hide the fact that they shouldn’t have hired these people in the first place,” Dimon said at JPMorgan’s China Summit in May.

For many, AI has been touted as a way to avoid drudgery. Still, presentation materials and assessment models are widely accepted as necessary learning tools.

Broadly speaking, graduates find it difficult to break into the field, said Timothy Lee, a student at the University of Warwick and head of the school’s Business and Finance Society.

Mr. Lee accepted the job from Wells Fargo, but said, “Prior to COVID, class sizes were increasing significantly.” “When the bank was doing well, we were hiring more, but now we don’t need to do that.”

Indeed, some banks are moving forward with plans to hire interns and new employees. Bank of America is hiring 2,000 summer interns across its eight business lines and another 2,000 full-time with plans to join the company this month.

Still, the bank hopes to keep its headcount flat and leverage AI to drive efficiency. bloomberg