US investment bank Morgan Stanley is cutting more than 1,500 jobs from its offices. According to sources familiar with the matter, the bank decided to reduce its workforce to cut costs amid increasing concerns brought about by global economic uncertainties.
The amount of people that will be let go represents around 2 percent of the bank's total workforce, which stood at around 60,500 employees in late September this year. Sources claim that the job cuts will mainly involve operational positions and technical roles.
Morgan Stanley is reportedly planning to save between $150 million to $200 million annually from the layoffs. The savings will go towards offsetting the company's decreasing revenues amid lowered interest rates, slower economic growth, and the disappearing volatility in the financial markets.
The investment bank is also facing added pressure from the rapidly changing the financial industry, which has been dramatically transformed by newer technologies such as cloud computing and artificial intelligence.
A report from HIS Markit estimates that over 1.3 million financial jobs in the US will likely be eliminated with the integration of these new technologies by 2030. The report also predicts that over 500,000 similar jobs in the UK would also be affected. A separate study by Wells Fargo predicts that jobs on Wall Street will decline by more than 200,000 in the next decade.
The financial jobs that will most likely be automated include bank tellers, customer service representatives, compliance officers, loan officers, and loan interviewers. Banks worldwide typically spend a combined $150 billion per year on technology. The sector has the highest expenditure on technology than any other industry.
Adapting to these new technologies would translate to added cost for the company, added cost that it plans to recuperate from the mass layoff. The company's CEO, James Gorman, mentioned in a statement that Morgan Stanley was committed to controlling its expenses. Gorman also stated that he remains confident in the sturdiness of the US economy. However, he did express concern over the outcome of the ongoing trade negotiations.
Concerns over the trade negotiations were somewhat alleviated in recent weeks as the US and China continue their talks. The US economy has also proven to be very resilient to the effects of the China-US trade dispute, further improving investor sentiments.
Apart from Morgan Stanley, other global financial institutions have also started mass layoffs in an attempt to control costs and brace for significant disruptions by newer technologies. In July, Germany-based investment bank Deutsche Bank cut more than 18,000 people from its workforce as part of its dramatic overhaul efforts.
