Is investment banking still a good career with the rise of AI?
Hi everyone,
I’m a student in Canada and I’m really interested in finance and investment banking.
At the same time, I’m a bit worried about AI and automation.
Do you think AI will replace jobs in investment banking in the future, or is it still a good career to aim for if I combine finance skills with AI knowledge?
I’d appreciate any advice. Thank you!
If you are still asking questions like this you are NGMI anyways
Thanks for the feedback. I’m here to learn and get different perspectives
There will always be a market for bespoke, thoughtful advice (boutiques) and access to key counterparties (good coverage bankers). A lot of process things can be optimized however. Would expect the industry to generally become leaner with deal volumes per head increasing. Then the question becomes what % of the increased profits go to labor vs capital - tale as old as time.
Thanks for the perspective. That makes sense it seems like routine processes will get optimized, but differentiated advice, relationships, and judgment will remain key. From a student perspective, the takeaway for me is to focus on building strong fundamentals while learning how to leverage AI as a tool rather than viewing it as a threat.
bump
I’m an associate and pretty worried about AI.
It seems to be speeding up. And I think many professional services will reduce headcount significantly. And less jobs with similar numbers of qualified people should drive down wages (and also promotions) in the short run. That’s the first order effect and I think this will be serious.
Those that remain will of course be more productive but I’m not convinced it will translate into larger bonuses.
In theory we’re going to see amazing growth rates in the economy but that doesn’t have to be a positive for workers in finance.
“I did everything right” in terms of education, banking to buyside etc. but I think this will come to bite many of us. I have pretty large sunk costs and I’m in a good seat so I’ll hope for the best and see what comes, not much I can do. My impression is that’s what most are doing/feeling.
Right now it looks like the most insulated industries are those related to actual assets rather than human capital. So energy, mining, manufacturing, hardware, infrastructure, etc. (although some parts of these will be disrupted too).
Not quite sure if the right advice should therefore be to become a Farmer but the case for going into finance is becoming more difficult. That is on top of pre-AI trends you have anyway (in particular fee compression). I hope I’m wrong.
What all are you actually seeing displaced at this stage? I think some big professional services firms are signaling ai driven headcount reduction for other functions mostly or as an excuse to cut costs in IB at this stage because the level of integration I am seeing with legacy office systems are still not there yet or remotely close. AI is being used to help polish language and expedite research but until the tool can actually do models and ppts in a reliable manner i am not sure i am that concerned. Maybe this is happening elsewhere and at my BB controls are different. But its a question of speed and im not sure anyone knows yet. Tough qs for a soon to be grad because you would want it to be after your analyst years (more mechanical work). If the associate and above roles are materially displaced then the economy would have bigger issues than just ibanking
I am not talking avout already getting displaced. But if you have GPT enterprise - it can already create ppt and xls, slow and bad at this stage but it will get a lot better.
It is amazing at going through a CIM and creating summary emails based on a template.
And ofc it can do call transcripts, help with research etc.
There are some things it lacks, including judgement and integration with workstreams, but the pace of change is insane.
bump
Bump
no, become a janitor instead (hard to make physical AI to replace janitors vs excel execution monkey AIs for bankers)
Maybe at the Analyst / Associate level, but it’s a relationship job past then
As someone in Canada that spent 4 years in IB and now working on the AI side of IB, you will be struggling not only with the Canadian IB market which is way more competitive, but also with the rise of AI. AI will take over Analyst-Associate IB roles quite soon. My guess is VPs and MDs will be safe. An MDs role will probably never be replaced by AI. And as for VP/Director, they will be the least affected for a longer period as once AI takes over IB workflows (modeling, making marketing materials, etc.) there has to be at least someone between the MD and AI to manage and instruct AI, review its work, and communicate with clients, while an MDs job will be to bring in deals and network. The MDs that usually execute instead of bring in deals will even struggle as they are paid too much to do that work. So, unless you already have a couple of years of IB experience in a specific industry that you could leverage to train and review AI, then I personally believe it is unwise to enter the market right now as an analyst.
You need to be AI proficient but AI will not replace good analysts anytime soon.
Small banks in the LMM hype up AI displaced headcount because they can’t attract the best talent but still want to service more deals, it makes sense for them to not hire.
Big banks in the bulge bracket market will use AI to automate back office roles, but hype in the front office is stock pumping narrative. They will still hire the best talent because deal activity is accelerating, and they will arm every body with AI so that a ramped analyst can work on 10 live deals that blow up at once instead of 5. The game is capacity maximization before cutting HC.
Middle markets and boutiques will play their hand depending on their quality of deal flow. The PJT/Q/and EVR’s of the world will still be selective with talent, but again arm folks with AI. They aren’t planning on decreasing average headcount, but scaling bodies slower than before most likely. However these shops grow by acquiring senior partners who bring in more deal flow, and at a certain point you need to add more bodies to grow.
Let’s not harp on a future that’s not close to happening - we have not heard of one real account yet at a known bank where the entire deal material drafting process has been taken over by AI and therefore obfuscated the need for an analyst on the deal, not one detailed account explaining exactly how it’s done, because it’s not happening . Not for any deal worth >$50M at least.
My best advice to you is to be the smartest “raw” analyst you can be, because we do worry about new juniors not knowing the core skills because they have offloaded their learning to AI, but then also learning the tool as best you can to become faster ONCE you know how to do it entirely by hand. Every new model technique you learn, learn it raw first and when you see it again for the 3rd time, starting thinking of AI applications to automate it. Then you can correct the AI, know its strengths and weaknesses, rather than be a slave to it.
The last point is very key. AI is incredible if you know how to do things the “analogue” way. Otherwise AI is useless as you won’t know what’s right and what’s wrong or how to interpret AI’s work product. There will always need to be someone on the other end to direct the work.
Quod voluptas aut molestias est et. Iste perspiciatis velit nostrum eum. Aspernatur eum voluptatem culpa et aspernatur deleniti. Nesciunt qui in aut ut et aspernatur est.
Dicta quae neque ab dolores nostrum rerum. Voluptatem beatae beatae dolor enim rerum eum tempora. Quaerat dolorem vel similique molestiae. Nihil et debitis esse.
Voluptas dolorem labore consequatur est. Dignissimos earum dolor autem repudiandae voluptas enim et praesentium. Ut voluptatem voluptatum voluptatem mollitia rerum sed eum. Delectus neque est enim nihil dolor suscipit omnis. Nostrum qui quaerat consectetur ex deserunt ipsa harum. Id veritatis suscipit corrupti reiciendis libero.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...