Less than four months ago, Bank of America CEO Brian T. Moynihan volunteered in a TV interview what he had to say to his 210,000 employees about the possibility of artificial intelligence replacing human labor.
“You don’t have to worry,” she said. “It’s not a threat to their jobs.”
Last week, after Bank of America reported a profit of $8.6 billion in the first quarter – $1.6 billion more than the same period last year – Mr Moynihan struck a different tone.
The bank’s key, he said, was helped by the loss of 1,000 jobs due to a divestment through “retirement and use of technology,” which he repeatedly said was artificial intelligence. He predicted more of that in the coming months and years.
“AI gives us places we can go without,” said Mr. Moynihan.
The essence of Wall Street’s long-held assertion — that AI will improve human labor and not replace it — is quickly fading, as evidenced by the current quarterly earnings season. JPMorgan Chase, Citi, Bank of America, Goldman Sachs, Morgan Stanley and Wells Fargo raked in $47 billion in combined profits, up 18 percent, while shedding 15,000 jobs.
They all credit AI to some degree for helping to streamline and automate work in areas ranging from the so-called back office, where tens of thousands of workers fill out paperwork to comply with various laws and regulations, to the front office, where seven-person payroll professionals put together complex financial transactions for corporate clients.
Unlike in Silicon Valley, few major financial figures specifically state that AI is eliminating jobs.
Citi, for example, has pledged to cut 20,000 jobs in what one executive described to financial analysts last week as “the company’s productivity and efficiency journey.”
The bank is paying for AI software from Anthropic, Google, Microsoft and OpenAI to automatically read legal documents, approve account openings, send commercial invoices and organize sensitive customer data, among other tasks, according to public statements by bank executives and two people familiar with Citi’s plans.
Among the recent job cuts at Citi are a number of employees who were part of the bank’s “AI Champions and Accelerators” program, according to the two people, who were not authorized by the bank to speak publicly. The program involves Citi employees going about their day jobs while working to persuade their colleagues to adopt AI technology.
A Citi spokesperson declined to comment.
Bad predictions about AI’s impact on employment have rocked the financial sector before, most recently in February when a bleak research report briefly rocked stock markets by predicting that AI would force high-paid professionals to take over driving for Uber.
Many large employers of white-collar workers describe AI technology as a tool that can eliminate the most painful aspects of desk life, and say it will free up office workers to pursue more important, high-paying jobs. Wall Street has been held up as a prime example of what economists call “complementarity,” where human performance is enhanced, not replaced, by AI.
Many on Wall Street have long argued that no software or chat agent can replace the personal relationships that exist in the financial profession.
What became clear was that I could do more than that.
At Wells Fargo, artificial intelligence software generates quick memos about the creditworthiness of potential borrowers, creates “loan letters” that banks use to convince companies to consider merger deals, and redoes or automatically answers all kinds of calls from credit card customers, executives said.
Wells Fargo has cut employees every quarter of the past year. Although the bank did not specify exactly how many of these criminals come from AI, its CEO, Mr. Charlie Scharf, made it clear that this technology will reduce the number of people working in banks.
“These are all opportunities to do things much, much more efficiently with AI than humans have been doing,” said Mr. Scharf in December. Most of the other bank officials, he said, “are afraid to say because no one wants to stand up and say that the number of students will be reduced in the future.”
“It’s a hard thing to say,” he added.
For those with a a grim outlook for the financial industry, it may be easy to dismiss these job losses as problems for the well-to-do professional class. (Wall Street handed out $49.2 billion in bonuses last year alone, according to New York State data.)
But the job losses are not limited to the Eastern US regions of the financial world. They also affect workers in low-cost cities across the country where banks and other asset managers have laid off workers in recent years. Citi’s layoffs this month included corporate employees in San Antonio; Tucson, Ariz.; and Tampa, Fla.
There is still hope for workers. At Morgan Stanley, famous for thousands of financial advisors helping the wealthy, executives have publicly said they will not replace jobs with AI.
The head of its wealth management division in February spoke of the technology in heroic terms, likening the AI tool that will suggest investments to clients to “JARVIS, from ‘Iron Man,’ but in money management,” a reference to Tony Stark’s shapeless buter.
A completely different film comparison came to mind for Steven Alexopoulos, a longtime banking analyst, in a 102-page research report in January for TD Bank, Canada’s second largest. He mentioned the movie “M3gan,” in which “an AI-driven doll goes from the role of friend, teacher and playmate” to “a force to be protected from.”
He predicted that AI would lead banks to an initial “profit transition”, followed quickly by a “reversal of fortunes” where customers rely on the technology to get high-interest bank accounts and cheap loans, dooming lenders’ ability to make money and ultimately leading to massive layoffs and bank closures.
This month, Mr. Alexopoulos has left TD, and his bank colleague said he has not been replaced.
In a LinkedIn post, Mr. Alexopoulos wrote that after more than a century as a bank analyst he was trying a new career: researching AI.
