Morgan Stanley analysts say the rapid adoption of artificial intelligence could allow European banks to cut their workforce by up to 20% in the “shorter term.”

In a research note released on Thursday, analysts including Giulia Miotto estimated that AI could drive productivity gains of around 30 per cent.

They added that this efficiency boost may translate into job reductions of between 10 per cent and 20 per cent over the next five years, with much of the decline expected to come through voluntary exits such as retirements.

Bank executives across Europe have increasingly acknowledged that AI will reshape staffing needs as the technology is deployed across multiple business functions.
Standard Chartered Plc recently said it plans to cut nearly 8,000 support roles over the next four years, linking the move to AI-driven restructuring.

Chief executive Bill Winters described the affected positions as “lower-value human capital,” though he later apologised for the wording.

HSBC Holdings Plc is reportedly exploring the possibility of cutting about 20,000 jobs, based on assumptions that artificial intelligence could allow it to streamline its middle and back-office operations, Bloomberg reported earlier this year.

In Germany, Commerzbank AG Chief Executive Bettina Orlopp, said last week that AI is expected to generate cost savings of roughly €350 million over the coming years.

Morgan Stanley analysts noted that the potential headcount reductions across European banks could translate into cost savings of about 4 per cent to 9 per cent in total.

They also highlighted that AI is not only likely to reduce costs but could also lift revenues by improving banks’ ability to target products more effectively to customers.

According to the analysts, institutions with integrated platforms spanning retail banking, savings, insurance, and wealth management are best positioned to benefit from these gains.