Morgan Stanley Says Banks To Cut 200,000 Jobs in 2026 as AI Ready To Take Over

In 2025, the tech industry witnessed massive layoffs triggered by artificial intelligence. According to a report by Morgan Stanley, in 2026 it could be the banking industry that will bear the brunt of AI-driven job cuts.

The investment bank estimates that more than 200,000 jobs may disappear within the next five years as lenders accelerate the use of artificial intelligence (AI) and continue shutting down physical branches. The study, reported by the Financial Times, covers 35 major European banks that together employ about 2.12 million people.

Morgan Stanley's forecast suggests that around 10 per cent of these jobs may be cut by 2030 as AI systems perform routine tasks more rapidly and cost-efficiently than human workers.

Which jobs are most at risk?

The report highlights that the positions most vulnerable to automation are those in what banks call "central services", including back-office and middle-office divisions that handle internal processes rather than direct customer service. These include risk management, compliance, transaction monitoring, and report preparation.

Such roles often involve repetitive work with large amounts of data. For example, checking transactions for irregularities, compiling financial reports, or processing information from multiple sources. AI algorithms can now perform these tasks quickly and error-free.

Why banks are turning to AI

The report attributes the transformation of the AI to European lenders' appetite for higher profitability that matches their American counterparts. There is intense pressure on them to improve efficiency and raise returns. Many European banks, especially in countries like France and Germany, have a higher cost-to-income ratio, which compares a bank's expenses to its returns, than desired.

Since traditional cost-cutting methods, such as reducing staff or closing branches, have already been widely implemented, these lenders are left with fewer options other than expanding AI-driven services to reduce expenses, the report said. Morgan Stanley notes that some institutions expect efficiency gains of up to 30 per cent from digitalisation and AI adoption.

Restructuring underway

Several banks have already announced major workforce reductions linked to technology-driven restructuring. Dutch lender ABN Amro has said it will cut about one-fifth of its full-time staff by 2028. In France, Société Générale's leadership has signalled that no part of the organisation is immune from cost-cutting measures.

Meanwhile, Swiss bank UBS has begun experimenting with AI in unusual ways. It has created digital "avatars" of analysts that can deliver video briefings to clients. UBS also sent 250 of its most senior managers to Oxford University for a leadership programme focused on AI, underlining how seriously it views the technology's impact on the industry.

Cautions from executives

Not all banks are rushing headlong into automation. At JPMorgan Chase, senior leaders have warned against depending too heavily on AI at the expense of human skill development. They argue that while AI can speed up routine work, junior staff still need to learn fundamental abilities such as building financial models and evaluating company performance. Without this training, the industry risks creating a future workforce that lacks essential expertise.

What next future banking

The Morgan Stanley report makes clear that AI is set to play a pivotal role in reshaping European banking. The technology promises faster processes and lower costs, but it also threatens widespread job losses. The cuts are expected to hit hardest in countries with high operating expenses and among banks that focus on consumer services.

For employees, the challenge will be adapting to a workplace where machines handle much of the routine work. For banks, the test will be balancing investor demands for efficiency with the need to maintain human expertise and customer trust.