Barclays Bets Big on AI: A New Era of Efficiency and Cost Cutting
Barclays is doubling down on artificial intelligence (AI) as a key driver for its next phase of transformation, aiming for approximately £2 billion in cost savings over the next three years. The bank’s finance chief, Anna Cross, highlighted AI as “a really core plank of the efficiency savings” the company intends to achieve.
AI: Not About Job Cuts, But Empowerment
Even as the implementation of AI often raises concerns about job displacement, Barclays is emphasizing a different approach. Anna Cross stated that the bank’s AI efforts are primarily focused on improving and harmonizing existing legacy technology, rather than targeting specific headcount reductions. Chief Executive CS Venkatakrishnan, known as Venkat, echoed this sentiment, describing AI as an “empowering technology” that will free up staff to focus on more complex and strategic tasks.
Strong Financial Performance Fuels Investment
Barclays’ commitment to AI comes on the heels of a strong financial performance. Pre-tax profits for 2025 climbed 13% year-on-year to £9.1 billion, exceeding analyst expectations. This positive momentum is enabling the bank to invest in future growth initiatives, including AI, and return capital to shareholders.
Capital Returns and Strategic Acquisitions
Between 2026 and 2028, Barclays plans to return over £15 billion in surplus capital to shareholders. The bank has already achieved £1.7 billion of its initial £2 billion savings target, and is now aiming for an additional £2 billion in gross efficiency savings. Recent acquisitions, such as Best Egg and Tesco’s banking operations, demonstrate the bank’s appetite for strategic growth, though it has faced competition in other potential deals, including the failed bids for TSB and Evelyn Partners.
Navigating Regulatory Challenges and External Pressures
Barclays is as well navigating a complex regulatory landscape. The bank is monitoring potential impacts from proposed US credit card interest rate caps, with Anna Cross noting the availability of “a number of levers” to mitigate any negative effects. The bank is addressing the fallout from the Jeffrey Epstein scandal, with Venkatakrishnan expressing shock at the “moral depravity” revealed and acknowledging his past working relationship with the former Barclays Chairman Bob Staley.
Executive Compensation and Policy Shifts
The bank’s strong performance has been reflected in executive compensation. CS Venkatakrishnan received a £15 million pay package for 2025, an increase from the previous year. This comes after changes to the UK’s bonus cap rules, allowing for increased incentive funding for staff. The 2025 bonus pool for Barclays staff increased by 15% to £2.2 billion.
The Future of Banking: AI and Beyond
Barclays’ strategic shift towards AI reflects a broader trend within the financial industry. Banks are increasingly recognizing the potential of AI to streamline operations, reduce costs, and enhance customer experiences. However, successful implementation will require careful planning, investment in infrastructure, and a focus on upskilling the workforce.
Did you know?
Barclays shares have increased by more than 200% since Venkatakrishnan unveiled his three-year turnaround plan in 2021.
FAQ
Will AI lead to job losses at Barclays?
Barclays states its AI focus is on improving technology, not specific headcount reductions.
What is Barclays’ target for cost savings?
Barclays aims to achieve £2 billion in gross efficiency savings between 2026 and 2028, on top of £1.7 billion already achieved.
How much capital will Barclays return to shareholders?
Barclays plans to return over £15 billion in surplus capital to shareholders between 2026 and 2028.
What is Barclays’ stance on acquisitions?
Barclays is open to acquisitions, but emphasizes the need for deals to be “priced to our liking.”
Pro Tip: Preserve an eye on Barclays’ progress in AI implementation, as it could set a precedent for other major financial institutions.
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