UK Banking Sector Faces 27,000 Job Cuts as AI Investments Surge

Banking jobs in the UK are under significant threat as the industry accelerates its investment in artificial intelligence (AI). Recent findings indicate that approximately 27,000 positions, or 10% of the workforce, may be at risk due to AI advancements. By 2030, financial institutions are projected to invest over £1.8 billion in generative AI, according to data shared with City AM.

This major shift towards AI is expected to yield substantial productivity gains. Insights from Juniper Research and Zopa Bank reveal that nearly 50% of cost savings will originate from back office functions, with about 82% of work hour reductions attributed to administrative tasks. The research forecasts that banks will cut 178 million work hours over the next five years, potentially resulting in a full return on investment, equating to £1.8 billion saved by 2030.

Major Banks Ramp Up AI Initiatives

The UK’s leading banks, including HSBC, NatWest, Barclays, and Lloyds, are actively enhancing their AI capabilities. Lloyds Bank initiated its AI expansion last year with the establishment of an AI Centre for Excellence, led by former Amazon executive Rohit Dhawan. Similarly, NatWest has partnered with OpenAI to streamline operations across the bank.

Competition has intensified as tech-savvy challengers enter the market, implementing innovative strategies to optimize efficiency. In response to these changes, Zopa Bank has launched a significant AI initiative, known as the Jobs 2030 campaign. This program aims to reskill 100,000 banking workers in AI-related fields by 2030. The campaign will offer tailored training aligned with the banking sector’s needs, including a generative AI Engineering Programme and the establishment of the Zopa Coding Academy.

Reskilling and Job Market Impact

Clare Gambardella, Chief Customer Officer at Zopa Bank, emphasized the need for collaboration within the sector to address the challenges posed by AI. She noted that many fintech companies face similar issues regarding workforce adaptation to AI advancements. While there is a “potential risk” of job cuts across the banking sector, Gambardella pointed out that the relatively lean structure of fintechs could mitigate some of these risks.

The integration of AI into UK banks is expected to proceed regardless of these challenges. Gambardella expressed confidence that Zopa’s campaign would position employees advantageously as the sector evolves. This comes in light of research from The Banker, which revealed that UK banks are shedding employees at the fastest rate since 2019.

Beyond banking, the wider job market is experiencing upheaval due to AI developments. Research from Adzuna indicates that vacancies for graduate roles, apprenticeships, internships, and junior positions have declined by more than 30% since the emergence of ChatGPT in late 2022. This has led to the lowest level of advertised vacancies for graduates since July 2020, coinciding with the pandemic’s economic impact.

The Big Four accountancy firms—KPMG, Deloitte, EY, and PwC—have also scaled back their early-career hiring, cutting intake by as much as 29% as they focus on AI integration.

As the banking sector navigates this transformative phase, the emphasis on AI-driven efficiency may redefine job roles and the future of work in the industry.