So-called “grunt work” done by junior-level analysts in financial services as they begin their careers can be replaced by generative artificial intelligence (AI), and that raises questions for the future of the industry, The New York Times reported.
Such basic entry-level tasks include assembling PowerPoint presentations, entering numbers into Excel spreadsheets, and finessing the language in financial documents. “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, in an interview with the Times. So, she asked: “Do you need fewer analysts?”
Wall Street firms are testing AI tools that can replace large numbers of analysts by performing in seconds the work that now takes hours, or a whole weekend. The software can possibly change the Wall Street career paths of young analysts and even negate the need to hire thousands of new college graduates.
Top executives at Goldman Sachs, Morgan Stanley and other banks have suggested 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.
Goldman is “experimenting with the technology,” Nick Carcaterra, a bank spokesman, told the Times. “In the near term, we anticipate no changes to our incoming analyst classes.”
“The easy idea is you just replace juniors with an AI tool,” said Christoph Rabenseifner, Deutsche Bank’s chief strategy officer for technology, data and innovation in an interview with the Times, although he added that human involvement will remain necessary.
The tasks for young analysts have been “[o]ne hundred percent drudgery and boring,” said Gabriel Stengel, a former banking analyst who left the industry two years ago, in an interview with the Times. Val Srinivas, a senior researcher for banking at Deloitte, told the Times that a lot of the work involved “gathering material, poring through it and putting it through a different format.”
“AI will enable us to do tasks that take 10 hours in 10 seconds,” Jay Horine, co-head of investment banking at JPMorgan, told the Times when describing analyst jobs. “My hope and belief is it will allow the job to be more interesting.” He said that he could use AI to identify clients that might be available for a bond offering, the sort of transaction for which investment bankers charge clients millions of dollars.
BNY Mellon’s chief executive said on a recent earnings call that his research analysts could now wake up two hours later than usual, because AI can read overnight economic data and create a written draft of analysis to work from, the Times reported.
Goldman Sachs is developing an AI tool that can convert a lengthy PowerPoint document into a formal “S-1,” the document for initial public offerings required for all listed companies. The software takes less than a second to complete the job.