Wall Street Braces for 200,000 Job Losses as AI Revolution Gains Momentum

The financial industry is bracing for a significant wave of job losses as artificial intelligence (AI) continues to encroach on tasks currently carried out by human workers. According to a recent report by Bloomberg Intelligence (BI), global banks could shed as many as 200,000 jobs in the next three to five years, with back office, middle office, and operations roles being most at risk.

The BI report, published on January 9, 2025, indicates that on average, chief information and technology officers surveyed expect a net three percent reduction in their workforce. However, nearly a quarter of the respondents predict a steeper decline, with between five percent and ten percent of total headcount being cut. The peer group covered by BI includes major players such as Citigroup Inc., JPMorgan Chase & Co., and Goldman Sachs Group Inc.

The shift towards AI is expected to lead to far-reaching changes in the industry, with improved earnings being a significant outcome. In 2027, banks could see pretax profits 12 percent to 17 percent higher than they would otherwise have been, adding as much as US$180 billion to their combined bottom line. Eight in ten respondents expect generative AI to increase productivity and revenue generation by at least five percent in the next three to five years.



Banks have been flocking into the new generation of AI tools that could further improve productivity, with Citigroup estimating that about 54 percent of jobs across banking have a high potential to be automated. However, many firms stress that the shift will result in roles being changed by technology rather than replaced altogether. Teresa Heitsenrether, who oversees JPMorgan's AI efforts, noted that the bank's adoption of generative AI has so far augmented jobs rather than replacing them.

As AI continues to reshape the finance industry, it is crucial for financial institutions to employ strategies that mitigate the potential negative effects on employment. Reskilling and upskilling programs, job transformation, creating new roles, human-AI collaboration, gradual implementation, and government policies and support are all essential components of a comprehensive approach to managing the transition.

In conclusion, the AI revolution in the finance industry is poised to bring significant job losses, with back office, middle office, and operations roles being most vulnerable. However, with the right strategies in place, financial institutions can navigate this transformation and create a more efficient, productive, and resilient workforce.