Barclays Bank announced on Thursday (October 22) that it will be reducing its workforce by a total of 5,000 employees this year, which is equivalent to 5% of its total workforce. This move aims to utilize technologies such as artificial intelligence (AI) to reduce fixed costs and enhance returns.
The bank has already cut 1,000 positions and plans to further reduce another 4,000 positions by the end of this year.
Barclays Bank disclosed the job cuts during the release of its third-quarter financial report on Thursday. The bank reported a profit of £2.3 billion (US$30.8 billion) in the third quarter, a 12% increase from the same period last year, but lower than analysts’ expectations due to poor performance in its fixed income trading business.
Barclays stated that they are “structurally reducing the cost base to free up resources for investment.” Chief Financial Officer Anna Cross told reporters that about 60% of the layoffs will focus on support roles, including developers. This indicates that the application of artificial intelligence is prompting companies to reduce personnel in such positions.
The bank is currently in the final stages of a three-year cost-cutting plan, primarily targeting its UK retail banking division, with the investment banking division also being impacted.
Will Howlett, a financial industry analyst at asset management company Quilter Cheviot, expressed, “This round of layoffs shows how significant the impact of artificial intelligence and automation technologies could be for the banking industry in the coming years.”
“For years, banks have invested heavily in technology, and now we are increasingly approaching a phase where these technology investments are starting to translate into actual reductions in manpower needed for operational activities,” he added.
Barclays Bank expects to further reduce costs by £1.1 billion by 2027 through various efficiency measures. Economists have been closely monitoring the performance of businesses, trying to identify signs of how investments in new technologies such as artificial intelligence are affecting recruitment.