Barclays to Slash 5,000 Jobs in AI Push Despite 12% Rise in Q3 Profit
Barclays is planning to shed 5,000 positions, or 5% of its staff, in an AI-driven cost-cutting move. The UK bank wants to use technology and automation to save fixed expenses and over 60 per cent of the employment being cut are support activities.
About 5,000 people, or about 5% of Barclays' employees, will lose their employment this year. The move is part of the British bank's strategy to increase profits while decreasing fixed costs through the use of technology and artificial intelligence (AI). As the news of the layoffs spread, Barclays revealed a profit of $3.08 billion for the third quarter, up 12% year-over-year.
Nevertheless, the outcome did not meet the expectations of experts due to the underperformance of the bank's fixed income trading division. The traditional fixed income division of Barclays Bank was underperforming, and CEO C S Venkatakrishnan expressed his disappointment and promised ways to resolve the problem.
Barclays’ Layoff & Future Plans
According to Chief Financial Officer Anna Cross, almost 60% of the jobs that are going to be lost will be in support functions, which include developers. The move exemplifies the growing trend of large banks automating non-frontline jobs and reducing manpower through the use of artificial intelligence and other technologies. Cross stated that approximately 1,000 positions had already been eliminated, and the remaining employment cuts are anticipated to be finalised by the end of the year.
Global financial institutions are reorganising in response to rising costs and decreasing profits as they try to increase efficiency through AI and automation. As part of its larger effort to enhance productivity and streamline operations, Barclays keeps investing in technology, even as it plans to reduce its personnel. According to Barclays, the goal of the cost-cutting initiative is to improve returns in the long run by establishing a more efficient corporate structure.
Barclays’ Ongoing Market Performance
Weak fixed income business dragged down an otherwise better quarterly profit of Barclays, further highlighting the difficulties confronting the bank's main trading operations in the third quarter. The bank's trading performance was poor because of the erratic quarter and the lack of interest in rates and credit products. As part of its longer-term commitment to lower expenses, particularly human costs, through increased use of technology, Barclays said it recorded a further USD 269.3 million in "structural cost actions" during the third quarter.
Companies are pouring more money into AI because they believe these new tools can accomplish routine jobs that humans undertake, like programming and administrative duties. Danske Bank, HSBC, and Standard Chartered have all announced layoffs linked to artificial intelligence thus far in 2019. Analysts speculated that banks would first think about the effects of AI on security and customer service before deploying the technology to cut costs, since banks have not yet taken significant steps towards the broad adoption of AI. By 2027, Barclays stated that it anticipates having saved an additional £1.1 billion thanks to its efficiency initiatives.
