JPMorgan Chase CEO Jamie Dimon at the Institute of International Finance (IIF) during the annual meeting of the IMF and World Bank in Washington, DC, USA on Thursday, October 24, 2024.
Kent Nishimura | Bloomberg | Getty Images
The era of artificial intelligence on Wall Street and its impact on workers has begun.
Major banks such as JPMorgan Chase and Goldman Sachs have announced plans to reimagine their businesses around AI, the technology that enables the mass production of knowledge work.
This means that even in a highly successful year for Wall Street, with trading and investment banking divisions unbundling billions of dollars in excess profits (usually not a time when the industry would severely limit headcount), companies are hiring fewer people.
JPMorgan said in its third-quarter earnings report Tuesday that its profits rose 12% from a year earlier to $14.4 billion, but its headcount grew by just 1%.
Chief Financial Officer Jeremy Burnham told analysts that JPMorgan’s leaders have been directed to avoid hiring as the bank implements AI across its businesses.
JPMorgan is the world’s largest bank by market capitalization, and is a behemoth that straddles Main Street and Wall Street finance. Last month, CNBC first reported on JPMorgan’s plans to bring AI to every customer and employee experience, as well as every behind-the-scenes process at the bank.
Burnham said Tuesday that the bank has a “very strong bias against reflexively hiring people for any need.” The bank had 318,153 employees as of September.
JPMorgan CEO Jamie Dimon told Bloomberg this month that while some jobs will be lost due to AI, the company will retrain affected employees and its overall headcount could increase.
“Limit the number of employees”
At rival investment bank Goldman Sachs, Chief Executive Officer David Solomon released his vision statement Tuesday on how the company will reorganize around AI. Goldman is coming off a quarter in which profits jumped 37% to $4.1 billion.
“To harness the full potential of AI, we need greater speed and agility in all aspects of our operations,” Solomon told employees in a memo this week.
“This doesn’t just mean re-platforming,” he says. “That means looking front and back at how you organize your workforce, make decisions, and think about productivity and efficiency.”
Impact on employees: Goldman will “control headcount growth” this year and lay off a limited number of employees, Solomon said.
Goldman’s AI projects will take years to implement and will be evaluated against goals such as improving the customer experience, increasing profitability and productivity, and enriching the employee experience, according to the memo.
Despite the plan, which primarily looks at restructuring processes such as client onboarding and sales, Goldman’s overall headcount has increased this year, said Jennifer Zuccarelli, a spokeswoman for the bank.
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The largest U.S. banks’ comments on AI echo those of tech giants like Amazon and Microsoft, whose leaders have told employees to prepare for AI-related disruptions such as hiring freezes and layoffs.
Companies across sectors have been more candid about the impact of AI on their employees this year, as the technology’s underlying models improve and investors reward companies seen as leading the way in AI.
The prevailing belief in the banking industry is that employees in operational roles, also known as back-office or middle-office, are generally most exposed to job disruption from AI.
For example, in May, JPMorgan executives told investors that operations and support staff would decline by at least 10% over the next five years, even as AI increases workloads.
At Goldman Sachs, Mr. Solomon appeared to warn the company’s 48,300 employees that the coming years could be uncomfortable for some.
“While we do not take these decisions lightly, this process is part of the long-term dynamism that our shareholders, customers and the public expect from Goldman Sachs,” he said in a memo. “We have always succeeded by not only adapting to change, but also anticipating and embracing it.”
