AI blamed as Morgan Stanley cuts 3% of global staff
What's the story
Morgan Stanley's recent round of layoffs, which affected 3% of its global workforce, is being attributed to the rise of artificial intelligence (AI) in the financial industry. While the company has cited "shifting business and location priorities" and "individual job performance" issues as reasons for the job cuts, insiders say that AI technology is a major factor behind these changes.
Technological shift
Job cuts across various divisions
The layoffs affected employees across various divisions, including investment banking and trading, wealth management, and investment management. Insiders say the cuts are largely due to the replacement of back-office workers with AI bots. These bots are seen as more efficient for an increasing number of jobs. Notably, they don't demand year-end bonuses or health care benefits like human employees do.
AI implementation
Wealth management division using AI program
A Morgan Stanley executive revealed that the company has launched an "awesome AI program with ChatGPT in the wealth management division." The insider added, "Lots of back offices getting the ax in this." However, a spokesperson for Morgan Stanley declined to comment on these claims. Despite this round of layoffs being attributed to the AI revolution, sources say such cuts are part of normal reductions at the firm.
Market impact
Morgan Stanley's continued success amid layoffs
Despite the layoffs, Morgan Stanley has been performing well. Last year, it broke revenue records and is expected to continue doing so if the current unrest in the Middle East is short-lived. The company heavily relies on retail investors and is likely to have another strong year despite these changes being attributed to AI. Other companies like Block, Twitter founder Jack Dorsey's latest venture, have also admitted to big AI-driven cuts.