American Express is cutting 5% of its workforce as it moves to incorporate AI into its internal processes, marking another instance of tech-related layoffs in the finance industry.
The company revealed on Friday a $336 million restructuring charge associated with the job cuts, which will affect thousands of its approximately 77,000 employees.
Christophe Le Caillec, the chief financial officer, explained in a CNBC interview following the third-quarter earnings report that these changes are intended to make American Express “leaner, more agile, and also [to prepare] for AI.”
He elaborated that the goal is to avoid automating processes that aren’t well-structured. “Our approach involves streamlining layers and widening spans of control, paving the way for automation and AI benefits in the near future,” he noted.
Following the announcement, American Express shares dropped over 3%, with investors seeing the layoffs as a sign of AI’s growing capacity to reduce jobs.
Similarly, British bank Barclays stated on Thursday that it plans to cut 5,000 jobs as part of its own AI integration efforts.
According to data from Challenger, Gray & Christmas, AI has been mentioned in more than 120,000 job cut announcements in 2023 through September, with the financial sector and other white-collar jobs heavily affected by the technology.
Despite challenges like record-low consumer sentiment and persistent inflation, American Express reported a profit increase as consumers, particularly those with higher incomes, continue spending despite rising prices.
During a call post-earnings report on Friday, CEO Stephen Squeri emphasized the necessity of the AI strategy and job reductions to enhance efficiency and readiness for the future.
“We have positive momentum, but to drive innovation and succeed in the upcoming years, we need to become a more agile and effective organization,” Squeri stated.
He mentioned plans to utilize AI for personalized customer interactions and offers, but reassured stakeholders that American Express will not permit unchecked AI systems within its infrastructure.
The tech industry has raised alarms over incidents where AI systems have behaved unpredictably or compromised safety protocols. Influential figures, such as Dario Amodei of Anthropic and Sam Altman from OpenAI, have urged for more stringent regulations and a temporary pause in AI development, particularly after recent warnings about potential existential risks posed by the technology.
“It’s crucial for us to safeguard our customers and merchants. We will only allow agents to access our systems that have been vetted through approved API or MCP processes,” Squeri explained, referring to two external security mechanisms.
On Friday, American Express reported adjusted earnings per share of $4.68, surpassing the forecast of $4.48. Revenue rose by 9% to $20.06 billion, slightly falling short of the $20.12 billion estimate.
The company also raised its full-year earnings forecast to $18.30 to $18.60 a share, an increase from the earlier range of $17.30 to $17.90. Le Caillec noted that the sale of the company’s stake in Global Business Travel Group contributed to this positive adjustment.
