Barclays and NatWest AI-linked job cuts in banking, Digi Mart USA News: Barclays has confirmed roughly 5,000 job cuts over the course of this year, with about 1,000 already completed in the first half and the remainder scheduled before year-end. CEO CS Venkatakrishnan said AI was driving the “bulk of efficiency gains,” according to the publisher’s report.
The cuts affect approximately 5% of the bank’s global workforce and sit inside a broader plan to deliver more than £1.1bn in savings by 2027, according to City A.M. Venkatakrishnan told investors that AI was the engine behind the efficiency progress, adding: “It has an important role to play and may have a more important role to play in the future.”
That framing marks a shift from his position in May, when he said the “fundamental impact” of AI was coming but that he did not quite see it “yet.” By the third-quarter update, he was giving AI direct credit for cost reduction. He qualified the message by saying “AI is the icing on the cake not the cake.”
NatWest followed a similar path. The bank cut its total headcount by 1,000 in the last quarter alone, bringing the year-to-date total to 1,400 reductions.
Those figures exclude the Evelyn Partners acquisition, and roughly a quarter of the cuts were tied to the sale of its Mentor consultancy.
NatWest delivered £420m in annual savings across the first nine months of the year, supported by its simplification programme and new technology investment. Its cost-to-income ratio fell to 45.7%, down from 47.8% a year earlier, with a stated target of below 45% by 2028.
CEO Paul Thwaite pushed back on the idea that AI is purely a headcount-reduction tool. “It’s too often framed in quite a narrow way around efficiency,” he said.
He added: “We’ve acquired some businesses and we’ve also sold some businesses… there’s no single change that’s influencing the numbers.”
Lloyds has set a £2bn savings target to be achieved by 2030, following a prior five-year strategy that had already delivered £2bn in savings. Finance chief William Chalmers described AI as an “important overall efficiency tool.”
Morgan Stanley doubled its forecast for AI-driven job losses across European banking to 400,000, representing roughly 20% of the continent’s banking workforce. Will Howlett, financials analyst at Quilter Cheviot, said: “Banks have spent heavily on technology for years, but we are increasingly reaching the point where that investment translates into fewer people being required to run the business.” The investor question, he noted, is whether banks can convert that investment into sustainably lower costs without compromising growth.
Net interest income has been sliding since the Bank of England began cutting rates. Rates remain well below the 5.25% high reached between August 2023 and 2024, with the Bank of England expected to raise to 4%, a partial recovery.
NatWest forecast its net interest margin reaching 2.5% in 2027, missing the 2.62% consensus. Jefferies equity analyst Jonathan Pierce said the miss contributed to a “knee-jerk” reaction in shares and that the “band-aid [was] torn off this season” for revenue expectations, with share price reactions running “larger than we might have thought.”
The combination of revenue pressure and AI-attributed headcount reductions suggests a structural reset rather than a quarterly fluctuation, with banks responding to both pressures at once.
