Lloyds Banking Group to Cut £2bn Costs, Invest £13bn in AI and Tech for Growth

Lloyds Banking Group will cut another £2bn of costs as part of a four-year plan under which its chief executive will use new tech and AI to drive growth.

Charlie Nunn said the strategy, which the UK’s largest high street lender will launch in January, would involve investing £13bn into the business by 2030, including for “pioneering technology” to lure new business, improve efficiency and increase payouts for shareholders.

That will involve rolling out “AI-powered advice” for wealth and workplace pensions, and using it to offer personalised offers based on customer behaviour, and give “support and guidance” to relationship managers, who are assigned to specific accounts.

While Nunn praised colleagues for guiding customers through “increasingly complex services, he said “we can make it even better, and even simpler, because we’re not good enough today, relative to our ambition”.

When asked how staff would be affected by £2bn in planned cuts, Nunn said he would consider all the same business areas that were in the bank’s crosshairs over the past five years, including better technology, reviewing physical office space and “improving our ability to increase productivity”, without giving details of any potential job losses.

“So, when we look to this next stage, those kind of levers will continue in front of us,” he told journalists on Thursday. “And we do think that there are new opportunities for agentic AI to both differentiate our services and grow more efficiently: IE provide services we’ve never been able to provide.

“That is going to impact work. It is going to require us to continue to re-skill people and hire new people, but that’s been my history for 30-odd years in financial services.”

As for the future of Lloyds’s 550 branches, Nunn said: “It will be important part of our proposition, but we’re going to follow the customers and our customer data around our branches.”

The strategy also pointed to international expansion, with Lloyds aiming to grow its corporate and institutional bank in the US and Europe, marking a big shift from the retrenchment that followed the lender’s bailout at the height of the 2008 financial crisis.

Nunn said he was also betting on AI and blockchain technology to cut waiting times for mortgage approvals to about three days; the bank would also boost rewards and loan discounts to retain loyal customers.

Lloyds will double down on its car loan division, which is still waiting to settle the long-running motor finance commission scandal, by creating a one-stop-shop app for drivers wanting to buy, insure and set up charging points for electric vehicles.

Chris Beauchamp, the chief market analyst at the investing and trading platform IG, said: “Nunn’s strategy to move away from the traditional lending business continues to deliver for Lloyds, though it is still a work in progress.

“The push towards the US and more corporate banking is understandable, but Lloyds would hardly be the first UK name to follow this demanding path – success here is far from guaranteed. Lloyds has the heft in its home market, but a move to a bigger global player is a significant undertaking.”

It came as the bank reported better-than-expected second-quarter profits, which rose to £2.3bn between April and June, a 14% jump from the same period last year. It meant bosses could increase payouts for shareholders, with a 1.58p a share dividend and the first ever share buyback announced at half-year, worth £1bn.

Lloyds’s share price rose 1.7% in response to the news on Thursday morning.