South Florida Sun-Sentinel Palm Beach (Sunday)
AI targets Wall Street jobs too
In sector reluctant to change, low-level roles at investment banks at risk from new tech
NEW YORK — Pulling all-nighters to craft PowerPoint presentations. Punching numbers into Excel spreadsheets. Finessing the language on esoteric financial documents that may never be read by another soul.
Such grunt work has long been a rite of passage in investment banking, an industry at the top of the corporate pyramid that lures thousands of young people every year with the promise of prestige and pay, which can start at more than $100,000, not including year-end bonuses.
Until now. Generative artificial intelligence — the technology upending many industries with its ability to produce and crunch new data — has landed on Wall Street. And investment banks, long inured to cultural change, are rapidly turning into Exhibit A on how the new technology could not only supplement but supplant entire ranks of workers.
The jobs most immediately at risk are those performed by analysts at the bottom rung of the investment banking business, who put in endless hours to learn the building blocks of corporate finance, including the intricacies of mergers, public offerings and bond deals. Now, AI can do much of that work speedily and with considerably less whining.
“The structure of these jobs has remained largely unchanged at least for a decade,” said Julia Dhar, head of BCG’s Behavioral Science Lab and a consultant to major banks experimenting with AI. The inevitable question, as she put it, is “do you need fewer analysts?”
Some of Wall Street’s major banks are asking the same question, as they test AI tools that can largely replace their armies of analysts by performing in seconds the work that now takes hours or a whole weekend. The software, being deployed inside banks under such code names as “Socrates,” is likely not only to change the arc of a Wall Street career, but also to essentially nullify the need to hire thousands of new college graduates.
Top executives at Goldman Sachs, Morgan Stanley and other banks are debating how deep they can cut their incoming analyst classes, according to several people involved in the ongoing discussions. Some inside those banks and others have suggested that they could cut back on their hiring of junior investment banking analysts by as much as two-thirds, and slash the pay of those they do hire, on the grounds that the jobs won’t be as taxing as before.
“The easy idea,” said Christoph Rabenseifner, Deutsche Bank’s chief strategy officer for technology, data and innovation, “is, you just replace juniors with an AI tool,” although human involvement will remain necessary.
Representatives for Goldman, Morgan Stanley, Deutsche Bank and others said it was too early to comment on specific job changes. But the consulting giant Accenture estimated that AI could replace or supplement three-quarters of bank employees’ working hours in the industry.
JPMorgan Chase CEO Jamie Dimon wrote in his annual shareholder letter this month that AI “may reduce certain job categories or roles” and labeled the technology top among the most important issues facing the nation’s largest bank. Dimon compared the consequences to those of “the printing press, the steam engine, electricity, computing and the internet, among others.”