Charlie Nunn, the chief executive of Lloyds Banking Group, has issued a stark warning to bankers across the UK: they must urgently "re-skill themselves" to survive the transformative wave of artificial intelligence sweeping through the financial services sector.
A Radical Transformation in Customer Experience
Speaking to reporters, Nunn emphasised that while the full decade-long impact of AI remains unpredictable, its influence is already undeniable. He stated unequivocally that this technological shift is "going to radically change how customers experience financial services." This fundamental change means that banks, including Lloyds, will inevitably be seeking to hire staff with entirely different skill sets in the coming years.
"We have to support colleagues to re-skill themselves," Nunn affirmed, acknowledging the bank's responsibility during this period of transition. He did concede that Lloyds would need to "reduce some jobs in some areas," but sought to temper more dramatic forecasts, such as a recent Morgan Stanley analysis predicting over 200,000 European banking jobs could be lost by 2030 due to AI and branch closures.
Navigating the Uncertainty of AI's Impact
"The reality is we don't quite know how this will play out in the medium term, and I think that's where you see the larger numbers being forecast," Nunn explained. "It's not that we're trying to hide anything. But at this stage, that's not what we're seeing specifically around generative AI – although I do think it will be transformational."
The bank provided a rare glimpse into the tangible financial benefits of its current AI deployment. Lloyds revealed that generative AI – technology capable of creating new content by analysing vast datasets – contributed a significant £50 million boost to its balance sheet last year. Practical applications included using AI to process customer complaints, reducing categorisation time from five minutes to just one second, and halving the time required for coding tasks.
"AI is a once-in-a-generation opportunity, and one the group is grasping for our customers," Nunn declared, underscoring the strategic importance of this technology.
Future Projections and the Rise of Agentic AI
Looking ahead, Lloyds anticipates these financial benefits will more than double, exceeding £100 million by 2026. This projected growth is tied to the bank's adoption of "agentic AI" – a more advanced, autonomous model that can proactively plan and execute complex tasks with minimal human supervision.
Regarding the sensitive issue of potential workforce reductions, Nunn stressed, "We always take that very, very seriously and support those colleagues. But I do see that there's a lot of new roles and skills we need, and we are investing in those."
Broader Economic and Policy Context
The discussion around AI's disruptive potential extends beyond individual banks. Investment Minister Jason Stockwood has suggested the UK might need to consider measures like a universal basic income to protect workers displaced by technological change. While not official government policy, Stockwood confirmed to the Financial Times that "people are definitely talking about it."
Nunn, reflecting on his 34-year career in finance, framed the current shift as part of a longer historical pattern. He recalled automating wholesale banking in the 1990s, stating, "We've seen radical efficiency improvements, and reallocation of talent and skills, through financial services for my whole career."
Strong Financial Performance Amidst Change
Lloyds' warnings about the future come alongside a report of robust current financial health. The group announced a 12% rise in pre-tax profits to £6.7 billion for 2025. This growth was driven by increased lending and strong performance in fee-generating operations like insurance, which helped offset the impact of falling interest rates.
The better-than-expected profits enabled Lloyds to reward shareholders with an additional dividend of 2.43p per share and launch a new £1.75 billion share buyback programme.
Nunn attributed part of this profit growth to a resurgence in the mortgage market. As the owner of the Halifax brand and the UK's largest mortgage lender, Lloyds has witnessed "strong volumes" and "good demand" for home loans. He noted, "We've seen interest rates come down a bit and we are expecting two or more interest rate cuts this year," adding that industry-wide innovation in affordability assessments has supported this growth.
The message from one of Britain's banking leaders is clear: the AI revolution in finance is not a distant prospect but an unfolding reality, demanding adaptation, investment in new skills, and a thoughtful approach to managing the human impact of profound technological change.
