AI is poised to replace the entry-level grunt work of Wall Street careers

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Pulling all-nighters to put together PowerPoint presentations. Punching numbers into an Excel spreadsheet. Correcting language on internal financial documents that may never be read by anyone else.

Such menial 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 each year with the promise of prestige and pay.

So far. Generative artificial intelligence—a technology sustaining many industries with its ability to generate and crunch new data—has arrived on Wall Street. And investment banks, long undergoing cultural change, are quickly turning to Exhibit A for how new technology can not only work but complement entire ranks of workers.

The jobs most immediately at risk are those held by analysts at the lower end of the investment banking business, who spend endless hours learning the basic building blocks of corporate finance, including mergers, public offerings and bonds. Complications of deals. Now, AI can do much of this faster and with much less fuss.

“The structure of these jobs hasn’t changed dramatically for at least a decade,” said Julia Dhar, head of BCG’s behavioral science lab and a consultant to major banks experimenting with AI. That he said, “Do you need? Less analyst?

Some of Wall Street’s biggest banks are asking the same question, as they test AI tools that could replace their armies of large-scale analysts doing tasks in seconds that now take hours, or All weekend long. Software deployed inside banks under code names like “Socrates” has the potential to not only transform Wall Street careers, but also to essentially eliminate the need to hire thousands of new college graduates.

Top executives at Goldman Sachs, Morgan Stanley and other banks are debating how much they might trim their incoming analyst classes, according to several people involved in the ongoing discussions. Inside these banks and others have suggested they could cut their junior investment banking analyst jobs by as much as two-thirds, and cut their pay, on the grounds that the jobs would not be taxed. as before.

“The simple idea is you just replace juniors with an AI tool,” said Christoph Rabensifner, Deutsche Bank’s chief strategy officer for technology, data and innovation, though he added that human involvement will remain essential.

Representatives for Goldman, Morgan Stanley, Deutsche Bank and others said it was premature to comment on specific job changes. But consulting firm Accenture estimated that AI could replace or complement about three-quarters of bank employees’ working hours across the industry.

Bank spokesman Nick Carcaterra said Goldman is “experimenting with technology.” “In the near term, we do not expect any changes in our incoming analyst classes.”

This week, JPMorgan Chase’s chief executive, Jamie Dimon, wrote in his annual shareholder letter that AI “could reduce certain jobs or roles,” and ranked the technology among the top issues facing the nation’s largest bank. stated. Mr. Damon compared the results to “the printing press, the steam engine, electricity, computing and the Internet, among others.”

Investment banking is a hierarchical industry, and banks typically hire young talent through two-year analyst contracts. Tens of thousands of 20-somethings (from both undergraduate and MBA programs) apply for about 200 spots in each major bank’s program. Salary starts over $100,000, excluding year-end bonuses.

If they persevere, they rise to the ranks of associate, then director and managing director. A handful of distributions are running. Although tough, the life of a senior banker can be glamorous, including traveling the world to groom clients and working on big-money corporate merger deals. Many who go through the two-year analyst program have gone on to become business titans — billionaires Michael Bloomberg and Stephen Schwarzman began their careers in investment banking — but the vast majority leave before or after their two years. will give, bank representatives said.

There are jokes among junior bankers that one of the most common tasks on the job involves dragging an icon from one side of a document to the other, only to be asked to change the icon again and again.

“One hundred percent work and boring,” said Gabriel Stengel, a former banking analyst who left the industry two years ago. Val Srinivas, a senior banking researcher at Deloitte, said a lot of work involves “collecting material, piercing it and putting it into a different shape.”

Another former banking analyst, Gregory Larkin, said the new technology would start a “civil war” within Wall Street’s biggest firms and tilt the balance of power toward the technologists who program the AI ​​tools. As against the bankers who use them. Technology companies, such as Microsoft and Google, license most of their AI technology to banks for hefty fees.

“AI will enable us to do things that used to take 10 hours in 10 seconds,” said Jay Horine, co-head of investment banking at JPMorgan, describing the analyst jobs. “My hope and belief is that it will make the job more interesting.”

AI’s impact on finance is just one aspect of how technology will reshape the workplace for everyone. Artificial intelligence systems, including large language models and question-and-answer bots like ChatGPT, can quickly synthesize information and automate tasks. Virtually all industries are beginning to grapple with it to some degree.

Deutsche Bank is uploading reams of financial data into proprietary AI tools that can quickly answer questions about publicly traded companies and produce summary documents on complementary financial moves The client can benefit — and the bank can make a profit.

Mr Horen said he could use AI to identify clients who might be ready for bond offerings, the kind of bread-and-butter transactions for which investment bankers charge clients millions of dollars. receive

Goldman Sachs has assigned 1,000 developers to test AI, including software that can turn “corpus” information — or huge amounts of text and data gathered from thousands of sources — into page presentations. can change to those that mimic the bank’s typefaces, logos, styles and charts. . One firm executive privately called it a “Kitty Hawk moment,” or one that would change the course of the firm’s future.

It is not limited to investment banking; BNY Mellon’s chief executive said on a recent earnings call that his research analysts can now wake up two hours later than usual, as AI can read economic data overnight and draft analysis to work on. .

Michael Pizzi, Morgan Stanley’s chief technology officer, told employees in a private meeting in January, a video of which was seen by The New York Times, that they would “get AI into every aspect of what we do,” including Wealth management, where banks employ thousands of people to determine the right mix of investments for good savers.

Many of these tools are still in the testing phase, and will need to run past regulators before they can be deployed at scale to live work. Bank of America’s chief executive said last year that technology is already enabling firms to hire less.

Among Goldman Sachs’ sprawling AI efforts is a tool under development that can convert a lengthy PowerPoint document into a formal “S-1,” the legal document required for all listed companies for initial public offerings. is full of

The software takes less than a second to complete the task.

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