Don’t say we didn’t warn you. Right from the start – right from when Richard Rivero, the head of the 75-person team of Goldman Sachs engineers automating parts of the firm’s investment banking function, promised that in the rosy automated future junior bankers would be liberated from tedious tasks and free to travel about meeting clients to their hearts’ content, we said that it all sounded a bit fishy. Now, unnamed senior bankers have admitted that indeed it is.
Those senior bankers aren’t necessarily at Goldman, but then Goldman isn’t the only bank busy trying to apply artificial intelligence wherever it can. They could just as easily be at J.P. Morgan or Bank of America. What matters is that something bad is coming, and they all know it.
Young people entering banking now need to, “pick their careers very carefully,” one, “top executive at a major Wall Street bank,” tells Bloomberg. He has children who are contemplating their careers and he says most areas of banking are a risky choice: “I think AI is going to eliminate most jobs. That’s a private view. I think we’re just starting to feel that.”
He’s not alone. Bloomberg spoke to about a dozen executives and technology consultants working on AI roll-outs with those executives and their message was the same: sentient machines will take over much more than has been discussed and banks won’t need nearly as many people.
It’s not their generation of staff who will suffer. As machine learning software designs its own trading algorithms, reads through company reports for relevant data, works out which clients to contact, scans legal documents, or runs deal processes, superannuated senior human beings will simply be phased out as they become obsolescent. “As we have attrition - internal or external - I’m just not replacing those people,” says Tom DeCarlo, an MD on UBS’s innovation committee.
Instead, it’s the young people at the start of their careers who want to get into banking but won’t be able to, or who land an analyst job only to find it automated away who will suffer. Last month, UBS CEO Sergio Ermotti said 30% of banking jobs could go in a decade due to AI. Bloomberg speaks to another UBS executive who puts it at 40% in four to eight years.
Meanwhile, none of the senior bankers Bloomberg spoke to believed their own assuaging words about AI creating a future filled with interesting work and client contact. The future, instead, is one in which most junior banking jobs won’t exist. As we pointed out previously, clients have no need of roving bands of 22 year-old analysts desperate to sell them the next M&A idea.
Separately, Romaine Taihuttu probably deserves some kind of prize for being the most tolerant spouse of a trader. Her husband, Didi, has got a thing for Bitcoin (he thinks it’s going to rise) and has persuaded her to liquidate everything in order to make the most of it. The family have sold their house, their cars, their shoes and put all their money into the cryptocurrency. Until the appreciation happens they are living on a campsite in Holland. "I was like, 'What the hell is bitcoin and crypto coin?' It was a lot for me to handle,” says Taihuttu. “But then I got into it, and it made me believe it was a good change in our lives -- for my children, for my husband, and for myself." Right.
This is the way in which AI will steal your job, division by division. (Bloomberg)
Bank of America is incorporating artificial intelligence into spreadsheets. (Payments)
Julian Pomfret-Pudelsky, a fixed-income algorithmic trader at Credit Suisse has invented a system called CSLiveEx, which will allow Credit Suisse to trade with more clients without employing more traders or balance sheet. (WSJ)
Goldman Sachs has asked some clients to pay $30k a year for up to 10 of their staff to access basic research through its analyst portal. They'll have to pay more to actually meet with analysts. (Bloomberg)
Selling personal loans and mortgages, which could be Marcus’s next target, is not a job designed for masters of the universe. Regulation and economics are rendering Goldman Sachs ordinary. (Financial Times)
Amsterdam, Madrid or Frankfurt? UBS bankers have been asked to choose. (Reuters)
UBS will be paying its US wirehouse advisors in exactly the same way as last year. (Barrons)
Jailed LIBOR trader Tom Hayes has raised £91k in crowdfunding and can appeal to get his $2.5m house back. (Bloomberg)
Start the day with an hour long bath to "think about things." (Telegraph)
Bull in Brooklyn. (NYTimes)
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