The notion that robots are coming for banking jobs is nothing new. In areas like G10 spot FX trading, they’ve come already. If fear of ‘electronification’ is keeping you up at night, however, you probably need to read McKinsey & CO’s new report, ‘Two routes to Digital Success in Capital Markets.’
If you’re only slightly concerned, you can read our chart-based summary below. There are ways of avoiding the machines, but not if you work in risk and compliance.
1. Work in securitized products, or emerging markets, or equity derivatives, or sales and trading of single name CDS
The chart below, from McKinsey’s report, shows which areas have been ‘digitized’ already and which areas are likely to be ‘digitized’ in future.
If McKinsey is right, securitization jobs will never ever succumb to robots. ” Complex and often bespoke, they are not amenable to electronic trading. In the near term, the main opportunity for digital in this area is in analytics tools for valuation and structuring that can increase voice volumes,” says the report. The same applies, although to a lesser extent, to emerging markets, equity derivatives and the sales and trading of single name collateralized debt obligations (CDS) (traders of which are unfortunately disappearing anyway).
Conversely, avoid risk and compliance at all costs.
2. Work with bespoke, complex, illiquid products that are traded only bilaterally
The products you want to be working with are described at the bottom left of the chart below. The products you do not want to be working with are described on the bottom right.
3. As a rule, avoid client onboarding, settlements, and compliance and risk reporting jobs
If time saved is a proxy for jobs lost, you do not want to be working in client on boarding. Or settlements, or anything to do with reporting. You do want to work in sales.
Photo credit: Dave Mathis