The global banking industry could witness a significant workforce shift as artificial intelligence (AI) takes on a larger role in daily operations. According to a recent Bloomberg Intelligence (BI) report, as many as 200,000 jobs may be at risk over the next three to five years, with automation poised to replace certain human-led functions.

The report, based on insights from chief information and technology officers, reveals that banks anticipate an average workforce reduction of 3%. Key areas likely to be impacted include back-office, middle-office, and operational roles, which involve repetitive and routine tasks. Customer service departments could also experience automation, with bots increasingly managing client interactions, while compliance processes like "know-your-customer" checks are similarly vulnerable.

"AI is most effective in tasks that follow predictable patterns," said Tomasz Noetzel, the BI senior analyst behind the report. “While it won’t completely replace jobs, it will undoubtedly transform the workforce, redefining roles rather than removing them outright.”

A more pessimistic outlook was shared by nearly a quarter of the surveyed executives, who expect workforce reductions of 5% to 10%, signaling a steeper decline for some banks.

Major Banks Embrace AI

Large financial institutions, including JPMorgan Chase, Citigroup, and Goldman Sachs, are already at the forefront of integrating AI technologies to improve efficiency and reduce costs. Banks have spent years upgrading their IT infrastructure, and AI tools are now being deployed to streamline processes and boost productivity further.

A June report by Citi underscored the widespread potential for automation within banking, estimating that over half—54%—of roles in the industry are susceptible to being automated.

Economic Gains from AI Integration

While job losses may dominate headlines, the financial upside of AI adoption is equally significant. The BI report estimates that AI-driven efficiencies could boost pretax profits across the sector by 12% to 17% by 2027, adding as much as $180 billion to the industry’s earnings.

In addition, 80% of the surveyed executives predict that generative AI will increase productivity and revenue by at least 5% within the next few years, further cementing its role as a driver of economic transformation.

From Replacement to Augmentation

Despite fears surrounding job cuts, many leaders in the financial sector stress that AI is more about augmenting human capabilities than replacing them entirely. Teresa Heitsenrether, who leads AI initiatives at JPMorgan Chase, noted that the bank’s use of generative AI has primarily enhanced roles by enabling employees to work more efficiently.

JPMorgan’s CEO, Jamie Dimon, offered a broader perspective on the transformative potential of AI. Speaking in 2023, he remarked that while some positions may be eliminated, the technology promises to improve workers’ quality of life significantly. “AI will bring breakthroughs in healthcare and other sectors,” Dimon said. “We’re heading toward a future where people could live longer and work fewer hours each week.”

The Challenge of Workforce Transformation

As banks navigate the shift toward automation, they face a dual challenge: leveraging AI to enhance productivity while ensuring their workforce adapts to the changing landscape. Many institutions are focusing on upskilling and reskilling initiatives to help employees transition into new roles that require human oversight and creative problem-solving—areas where machines cannot yet compete.

The focus on responsible AI integration reflects a growing awareness that technological progress must be balanced with workforce well-being. By prioritizing a human-centered approach, banks can manage this transformation more sustainably.

The next few years will test the banking industry’s ability to embrace AI without losing sight of its human workforce. With automation set to impact hundreds of thousands of roles, the need for innovation, ethical considerations, and strategic workforce planning has never been more pressing.

As Noetzel concluded in his analysis, “AI’s rise is less about elimination and more about evolution. Banks must ensure that transformation benefits not just their bottom line but also their people.”