JPMorgan Chase and Goldman Sachs are already using AI to hire fewer people

The era of artificial intelligence has begun on Wall Street and its impact on workers.

Major banks including JPMorgan Chase and Goldman Sachs They unveil plans to reimagine their business around artificial intelligence, the technology that allows mass production of cognitive work.

That means that even during a busy year for Wall Street, with commercial and investment banking generating billions of dollars in excess revenue — not a time when the industry typically keeps a tight lid on headcount — companies are hiring fewer people.

While profits jumped 12% from a year earlier to $14.4 billion, headcount rose just 1%, JPMorgan said Tuesday in its third-quarter earnings report.

Bank managers have been told to avoid hiring people as JPMorgan deploys artificial intelligence across its business, Chief Financial Officer Jeremy Barnum told analysts.

JPMorgan is the world’s largest bank by market capitalization and a juggernaut across Main Street and Wall Street finance. Last month, CNBC was the first to report on JPMorgan’s plans to inject artificial intelligence into the experience of every customer and employee and every behind-the-scenes process at the bank.

Barnum said Tuesday that the bank has “a very strong bias against having a reflexive response to any particular need to hire more people.” JPMorgan had 318,153 employees as of September.

JPMorgan CEO Jamie Dimon told Bloomberg this month that artificial intelligence will eliminate some jobs, but that the company will retrain those affected and that its overall headcount could grow.

At rival investment bank Goldman Sachs, CEO David Solomon on Tuesday issued his own vision statement on how the company could reorganize itself around artificial intelligence. Goldman is coming off a quarter in which its profits rose 37% to $4.1 billion.

“To fully leverage the promise 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 retooling our platforms,” he said. “This means taking a first-hand look at how our employees organize, make decisions, and think about productivity and efficiency.”

The result for his workers: Goldman will “restrict headcount growth” and lay off a limited number of employees this year, Solomon said.

Goldman’s AI project will take years to implement and will be measured against goals including improving customer experiences, increasing profitability and productivity and enriching employee experiences, according to the memo.

Even with these plans, which look first at reengineering processes such as customer onboarding and sales, Goldman’s overall headcount is on the rise this year, according to bank spokeswoman Jennifer Zuccarelli.

Comments on artificial intelligence from the largest US banks mirror those of technology giants including Amazon and Microsoftwhose leaders have asked their workforces to prepare for AI-related disruptions, including hiring freezes and layoffs.

Companies across sectors have become clearer this year about the potential impacts of AI on employees, as underlying models of the technology become more capable, and as investors reward companies seen as being ahead of the curve in AI.

In banking, the prevailing thinking is that workers in operational roles, sometimes referred to as back and middle office, are generally the most vulnerable to business disruption due to AI.

For example, in May, a JPMorgan executive told investors that operations and support staff would decline by at least 10% over the next five years, even as business volumes grow, thanks to artificial intelligence.

At Goldman Sachs, it was as if Solomon was warning the company’s 48,300 employees that the next few years might be uncomfortable for some.

“We do not make these decisions lightly, but this process is part of the long-term dynamic that our shareholders, clients and people have come to expect from Goldman Sachs,” he said in the memo. “The company has been successful not only by adapting to change, but also by anticipating and embracing it.”