State Street pays severance to 900 employees amid pivot toward AI

Boston-based financial giant State Street is undertaking a $100 million "operating model transformation" that involves paying severance to 900 former employees. In the corporation's recent earnings report, State Street announced its repositioning charge from the second quarter. During an investor call, company leadership said it was part of a plan incorporating AI and other internal improvement efforts.“The charge in the second quarter illustrates the opportunity as we drive further operational efficiency and unlock productivity gains over time, supported by AI and continued platform scaling," said Ronald P. Hanley, the Chairman and CEO.According to the earnings report and presentation, the charge was related to "compensation and employee benefits primarily from workforce rationalization."Company executives told investors that they expect to recoup the money through savings with a payback period of roughly 4-5 quarters.This decision was made after the company conducted a global institutional investor survey regarding data strategies and their relation to AI-driven growth. It found that the "majority of firms expect to realize investment, revenue, and efficiency gains from holistic data strategies and generative AI within two years."When asked about the pivot, a company representative stated, "the repositioning charge reflects approximately 900 global reductions. These actions are part of a broader effort to streamline operations and enhance long-term efficiency. We continue to make investments across our business including hiring in areas that enhance our clients’ experience, build on our strategic growth and reinforce our focus on service excellence."