Will AI cause more Wells Fargo job cuts?

Wells Fargo expects its workforce to shrink again in 2026 as the bank expands its use of generative AI across core operations. CEO Charlie Scharf outlined the plan during the Goldman Sachs U.S. Financial Services Conference, telling investors that fourth-quarter severance costs will rise and that additional headcount reductions are planned next year.

According to Scharf, generative-AI coding tools have increased engineering productivity by 30% to 35%, describing the gain as a measurable shift inside the technology organization. He said the rollout of AI across the rest of the bank will be gradual but steady, and that technology “is going to potentially do to headcount what we’ve seen technology do to headcount over a long period of time”.

Wells Fargo has been restructuring since Scharf’s arrival in 2019, cutting operating costs and expanding investments in risk and compliance systems. The bank employed about 275,000 people in 2019 and reported a little over 210,000 as of Sept. 30, 2025, a decline documented in quarterly filings and referenced in earlier reporting.

The bank is now operating without the Federal Reserve's growth restriction for the first time in nearly seven years. The Fed lifted Wells Fargo’s asset cap in June 2025, saying the bank had met the required governance and risk-control benchmarks. Wells Fargo confirmed the removal in its own release the same day. With the cap removed, Wells Fargo has more freedom to redirect capital toward expansion initiatives while continuing the multiyear cost reduction that began earlier in Scharf’s tenure.

AI shifts the cost base

Scharf said Wells Fargo had already budgeted for a smaller workforce before factoring in AI-driven efficiency gains. The bank expects higher severance expenses this quarter as it eliminates or consolidates roles. Wells Fargo has reduced staff repeatedly over the last five years; filings show year-over-year declines from 2020 through 2025 as remediation efforts and operational consolidation continued.

The clearest internal change is in engineering, where Scharf said AI coding tools have delivered a 30% to 35% efficiency gain. That aligns with Microsoft’s own enterprise-deployment findings for GitHub Copilot, which reported reductions in repetitive code-generation tasks in early Fortune 500 rollouts.

Other large U.S. banks have already introduced generative-AI systems in repetitive, rules-based processes. JPMorgan Chase reported AI deployments for contract analysis and customer-service workflows in its 2024 risk-management disclosures. Citi’s compliance division launched generative-AI pilots in 2024 designed to speed document review and QA, and said those pilots produced “material reductions” in processing time.

Scharf said Wells Fargo will extend AI into similar operational areas “very thoughtfully,” emphasizing gradual adoption and tight control frameworks.

A turning point as the asset cap ends

The removal of the Federal Reserve’s asset cap marked a shift for Wells Fargo. The cap, imposed following the 2016 sales-practices scandal and formalized in the 2018 consent order, limited the bank’s balance-sheet growth until risk-governance reforms were complete. When the Fed lifted the cap in June 2025, it said the bank had satisfied the supervisory conditions outlined in the order.

With the restriction gone, Wells Fargo now faces a different operational mandate: expand selectively while maintaining tight cost control. Scharf said the bank is “set up to continue to grow” but must remain “exceptionally disciplined” on expenses as it enters 2026.

For employees, the implications are less hopeful. Management expects staffing to contract further next year through a combination of attrition and targeted reductions. Scharf has said the bank will retrain staff where possible but will make structural changes where AI provides measurable productivity gains.

The broader banking industry is moving in the same direction. Goldman Sachs estimated in 2023 that generative AI could automate “roughly one-quarter of work tasks” in the banking and finance sector. Citi, JPMorgan, Bank of America, and Goldman have all told investors that AI is being deployed as an efficiency tool in internal operations, particularly in high-volume administrative work.

As Wells Fargo moves into 2026, severance charges in late 2025 set the foundation for lower operating expenses once AI-supported workflows scale. How quickly that shift appears in earnings will depend on the pace of deployment, the consolidation of overlapping processes, and the bank’s ability to integrate AI systems under newly expanded governance structures following the end of the asset cap.