Barclays to cut 5,000 jobs as it seeks to reduce costs with AI

Barclays is reducing its workforce by approximately 5,000 employees as it integrates more artificial intelligence (AI) into its operations. The bank has already terminated 1,000 positions and anticipates completing an additional 4,000 cuts by year-end, representing around 5% of its global workforce. The majority of these reductions will impact the bank's UK retail division, with some back office functions being outsourced to India.

Barclays attributes the job cuts to an ongoing modernization plan, with AI serving as the "icing on the cake" of its strategy. The bank is concluding a three-year cost-cutting program primarily focused on its UK retail banking arm, but the investment banking division is also affected. Barclays reported a profit of £2.3 billion in the three months ending September, which exceeded analyst expectations but fell short of forecasts.

Barclays Group CEO CS Venkatakrishnan stated that the job cuts are a result of significant investments in technology aimed at simplifying and enhancing the company's business operations. He emphasized that AI will play an increasingly important role in the future, but noted that it is merely an enhancement to the foundational infrastructure. Around 60% of the job reductions will target support functions, including software development teams.

Financial analysts have expressed mixed opinions on the impact of these layoffs. While some, like Russ Mould from AJ Bell, believe Barclays is aggressively embracing AI and expects a substantial workforce reduction as it expands its use of artificial intelligence, others, such as Will Howlett from Quilter Cheviot, view the cuts as indicative of a broader industry shift.

Howlett suggests that AI and automation could fundamentally reshape the banking sector in the coming years, as companies increasingly leverage technology to reduce the need for human labor. Barclays expects its efficiency measures to generate an additional £1.1 billion in savings by 2027.