Morgan Stanley is now the latest bank to unveil plans to reduce its workforce. JPMorgan Chase, Goldman Sachs and Bank of America each announced similar initiatives earlier this year.

Sources familiar with the matter said Morgan Stanley is preparing to cut some 2,000 jobs later this month, equivalent to 2% to 3% of its workforce, excluding financial advisers. The move is purportedly driven by a push for greater operational efficiency rather than immediate market conditions.

Despite expectations of a post-election resurgence in capital markets, optimism has yet to translate into real activity. Many firms remain cautious due to policy uncertainty, particularly following US President Donald Trump’s recent tariff announcements.

“New equity issues and mergers & acquisitions are certainly a bit on pause, or the bar is high because of some of the policy uncertainties,” said Morgan Stanley Co-President Daniel Simkowitz, highlighting how regulatory unpredictability is forcing companies to reassess hiring and investment strategies.

Also Read: JPMorgan job cuts coincide with hiring

Banks are responding to market shifts

The decision at Morgan Stanley is not an isolated event. Other Wall Street banks have been making strategic workforce reductions in response to shifting economic conditions and changing business priorities.

Goldman Sachs has brought forward its annual performance review and plans to cut 3% to 5% of its workforce – potentially eliminating over 1,395 jobs. The bank has undergone multiple rounds of layoffs since 2023, reflecting stagnation in dealmaking and a retreat from a loss-making consumer business.

Bank of America recently cut 150 junior banker roles within its investment division. The move, part of its regular performance review, also follows a broader slowdown in deal volumes. While most affected employees are being offered positions outside investment banking, some have opted to leave.

In an earlier round of layoffs, the bank eliminated 1% of its global markets and investment banking workforce, including managing directors, directors, and vice presidents.

JPMorgan Chase is also making adjustments. It started layoffs in February, affecting fewer than 1,000 employees as part of its ongoing workforce management. Despite the cuts, the bank has 14,000 open roles and continues hiring in key areas.

This wave of job reductions reflects Wall Street’s efforts to balance efficiency with long-term growth in an increasingly complex business landscape.

Also Read: DBS predicts AI will affect 4,000 jobs

How AI factors into the banking workforce

While cost-cutting and economic uncertainty are driving immediate layoffs, another force is reshaping the financial industry’s workforce – artificial intelligence.

According to Bloomberg Intelligence, major banks could slash as many as 200,000 jobs over the next three to five years as AI automates tasks once performed by humans.

Back-office and middle-office roles – traditionally responsible for data processing, financial analysis, and risk assessment – are particularly vulnerable. AI systems are proving far more efficient at handling these functions, reducing the need for large human teams.

Even entry-level positions may be at risk, with some firms contemplating reducing junior analyst hiring by two-thirds.

But while AI will displace some roles, it is more likely to transform jobs rather than eliminate them entirely, according to Bloomberg Intelligence senior analyst Tomasz Noetzel.

Some institutions, including Citigroup, JPMorgan, and Goldman Sachs, expect job losses ranging from 5% to 10% due to automation. However, the shift is not all doom and gloom: 80% of banking executives believe that generative AI will increase productivity and revenue by at least 5% over the next few years.

From redundancy to reskilling: The future of finance careers

The rise of AI presents both a challenge and an opportunity for financial professionals. While traditional roles may decline, new positions will likely emerge in areas such as AI oversight, ethics, and strategy development.

There will be a growing demand for skills in computer science, statistics, and data analysis, as banks look for talent capable of managing AI-driven financial ecosystems.

The industry is at a crossroads: firms must decide whether to simply reduce headcount or invest in upskilling employees to adapt to the new landscape.

With AI expected to boost pre-tax profits by 12% to 17% – potentially adding US$180 billion in additional earnings by 2027 – the financial sector is entering an era where human ingenuity and technological advancement must go hand in hand.

In the short term, job losses and restructuring will dominate headlines. But in the long run, those who keep pace with the demands of the industry – leveraging AI rather than being displaced by it – will define the future of Wall Street.