The worst part of a career on Wall Street may be about to end

NEW YORK — I work all night preparing PowerPoint presentations.

Enter numbers into Excel spreadsheets.

Refine the language of esoteric financial documents that perhaps no other soul will ever read.

These grueling tasks have long been a rite of passage in investment banking, a sector at the top of the corporate pyramid that attracts thousands of young people every year for the prestige and money it promises.

Or what he promised, until now. Generative artificial intelligence – the technology that is fundamentally changing many industries thanks to its ability to produce and take into account new data – has already arrived on Wall Street.

And investment banks, long accustomed to cultural shifts, are quickly becoming the first evidence that this new technology not only complements, but could replace entire groups of workers.

The jobs most immediately at risk are those of the lowest-level analysts in investment banking, who spend countless hours learning the fundamentals of corporate finance, such as the enormous complexities of mergers, public offerings and bond deals.

Now, Artificial intelligence can do much of this work faster and with far fewer complaints.

“The structure of these jobs has remained largely unchanged for at least a decade,” said Julia Dhar, director of the Behavioral Sciences Laboratory at consultancy BCG, which leads major banks in experimenting with artificial intelligence. The inevitable question, in your opinion, is:

“Do they need fewer analysts?”

First steps

Some of Wall Street’s top banks are asking themselves that question now as they test artificial intelligence tools that can almost completely replace their armies of analysts, completing in seconds a job that now takes hours or even an entire weekend.

This software, installed in banks with code names like “Socrates,” will likely not only change the arc of a career path on Wall Street, but essentially eliminate the need to hire thousands of new graduates.

The senior executives of Goldman Sachs, Morgan Stanley and other banks are discussing how much to reduce the pool of new analysts, according to several people involved in the talks.

Some bank employees and others are proposing eliminating as much as two-thirds of the hiring of lower-level investment banking analysts and reducing the pay of those they hire, so they don’t have to do as grueling work as before.

“The simple idea,” explained Christoph Rabenseifner, head of strategy for technology, data and innovation at Deutsche Bank, “is simply to replace junior analysts with an artificial intelligence tool,” although he added that human intervention will still be necessary.

Representatives of Goldman, Morgan Stanley, Deutsche Bank and other banks said it was too early to talk about specific changes in jobs.

But consulting giant Accenture estimates that artificial intelligence could replace or supplement nearly three-quarters of the working hours of bank employees across the industry.

Goldman is “experimenting with the technology,” said Nick Carcaterra, a bank spokesman.

“In the short term we do not foresee any changes in the group of new analysts.”

This week, Jamie Dimon, CEO of JPMorgan Chase, wrote in his annual letter to shareholders that artificial intelligence “may reduce certain categories of jobs or positions” and identified the technology as the most important issue facing the world’s largest bank. nation must face.

Dimon equated its consequences to those of the “printing press, the steam engine, electricity, computing, and the Internet, among others.”

Investment banking is a hierarchical industry and young talent hired by banks typically enters analyst roles on two-year contracts.

Tens of thousands of 20-year-olds (both undergraduate and graduate) apply to fill approximately 200 positions in the program at each of the major banks.

The starting salary is more than $100,000excluding year-end bonuses.

If they persevere they will be able to receive promotions and become assistants, then directors and general managers; some manage to take charge of a division.

While the life of a senior banker is exhausting, it can be fascinating and include travel around the world seeking new clients, as well as some involvement in high-value corporate merger deals.

Many employees who complete the two-year program as analysts have become titans of the industry – billionaires Michael Bloomberg and Stephen Schwarzman began their careers in investment banking – but most leave the industry at the end of the two years or sooner, having said some bank representatives. .

A joke among low-ranking bankers is that one of the most common tasks of their position is to drag icons from one side of documents to the other and then return the icon to its previous position multiple times as required.

“100% monotonous and boring,” said Gabriel Stengel, who was a banking analyst and left that industry two years ago.

Val Srinivas, senior banking researcher at Deloitte, explained that much of the work involves “collect material, revise it and adapt it to another format”.

Gregory Larkin, another former banking analyst, said the new technology will spark “a civil war” within Wall Street’s biggest firms, tipping the balance of power in favor of the technologists who program the AI ​​tools , to the detriment of the bankers who use them.

Not to mention tech giants like Microsoft and Google, which sell licenses to use much of the AI ​​technology to banks at high fees.

“AI will allow us to do tasks that take 10 hours in 10 seconds,” Jay Horine, co-head of investment banking at JPMorgan, said of the analysts’ work.

“I think this will make the job more interesting, and I hope so.”

Goldman Sachs has tasked 1,000 developers with testing artificial intelligence, including software that can turn what it calls “corpus” information – massive amounts of text and data collected from thousands of sources – into one-page presentations with the source, the logo, design and graphics. of the bank.

A company executive, in a private conversation, described the situation as a “Kitty Hawk moment,” one that will change the future course of the company.

One example of Goldman Sachs’ many AI projects is a tool under development that can turn a long PowerPoint document into a formal “S-1” format, the document full of legal terms that all public companies require for an initial public offering.

This software requires less than a second in carrying out the task.

c.2024 The New York Times Company