Tech, which is becoming increasingly sophisticated, will replace investment bankers

jessivey's picture
Rank: Chimp | 12

At the junior level, investment bankers engage in highly repetitive tasks, and although each deal is different, the tasks can easily be automated. As technology becomes more sophisticated and learns to have human elements, it will also eventually be able to replace those in the senior ranks. What are your thoughts?

Comments (40)

Nov 8, 2019

Nah

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Nov 8, 2019

Elaborate?

Array
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Nov 9, 2019

There are too many variables for this to be realistic (and for the bank to stay competitive) for at least another lifetime.

Source: my ass, but that was your source as well.

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Most Helpful
Nov 8, 2019

Senior bankers are basically sales people. If AI can't sell me a pair of pants or box of toothpicks (and so far, it can't) I'd say we're a long, long way from it selling merger advice or capital market products.

What banks need to worry about, in my view, is algorithms performing the previously opaque and high margin work that people have done in distribution - book building, account targeting, capital structure analysis, etc. Obviously this is well underway, but it's accelerating. S&T is increasingly performed by computers, and I'd venture that ECM/DCM are next to fall.

For junior bankers, technology is just going to eliminate or automate some of their annoying and low value-add work. That may reduce hiring needs some, but not massively, at least not for a while.

Nov 11, 2019

"What banks need to worry about, in my view, is algorithms performing the previously opaque and high margin work that people have done in distribution - book building, account targeting, capital structure analysis, etc."

^^^ THIS.

Account targeting is the most teedious task on the planet, especially with no internal CRM system to track previous deals and account location (constant duplication of efforts from deal to deal).

Nov 11, 2019

How is account targeting done currently?

Nov 9, 2019

Everybody who says this has not worked at a bank.

Do you know how terrible most bank IT is? It's awful. Banks consistently shit themselves on tech ROI. Even core banking operations platforms are ass, looking at you LIQ. Banking is 5 years away from being 5 years away from taking intern level work out.

To your point about senior bankers: last time I checked, F500 CFOs don't play golf with "tech"; they play golf with my MD.

I'm not saying banking will last forever, but this whole narrative is like the universal basic income idea: it's a neat idea, but structurally impossible any time soon.

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Nov 9, 2019

Anyone who works in the industry will understand that technology, although highly beneficial to a job well done, will not replace the broader functions of an investment banker (Junior or Senior) for some time:

A few points on my perspective having worked in the industry:
1.) Executives are people, and people prefer working with empathetic people.
2.) The emotional quotient involved in a negotiation, sale process, or client interaction is highly complex and requires human-specific understanding.
3.) Businesses are highly unique and require equally unique problem-solving capabilities, which at times take into account other human interests and motivations.
4.) Good business valuations are developed not from an algorithm, but from an intrinsic understanding of a human to human marketplace rife with irrational behavior.

**As an aside, if you're arguing AI singularity here - perhaps if/when the banker becomes automated you have larger issues to worry about... like Arnold Schwarzenegger coming into the board room terminator style to kill John Connor.

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Nov 9, 2019
Keyser Soze 123:

**As an aside, if you're arguing AI singularity here - perhaps if/when the banker becomes automated you have larger issues to worry about... like Arnold Schwarzenegger coming into the board room terminator style to kill John Connor.

Specifically why we don't have anyone named John on my company's board. Too much risk of collateral damage.

Nov 9, 2019

+sb - It's not good enough these days to have a ten-year plan. If you want to beat your competition you need to think ten thousand years down the road.

Funniest
Nov 9, 2019

Tech is a meme and grossly overhyped quasi 5.0 bullshit. WeWork and SoftBank just proved it. Relax.

Whenever I read the words "We use AI / ML to ... " I close any About Us monopage and take a mental vomit.

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Nov 9, 2019

Legendary comment here.

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Nov 9, 2019

Do you not see them making a turnaround? They (Softbank) just reinvested supposedly. I see them still making a sizable profit; especially with all the noise made by this blow up.

Nov 10, 2019

How do you see them making a sizeable profit if Regus, an "old age" (LOL) CRE, is ages ahead of them in all KPIs, starting from top line, margins and all the way down to the bottom line, not to mention non-P&L KPIs such as asset base, square footage, number of offices etc. (I think it goes without saying that on a per sqft and/or number of sites basis there just is no sane way to say that there is zero competition between the two...?) Regus' CEO literally said that there is NOTHING that WeWork is doing that Regus isn't and that he is baffled how his own company's valuation is 13x smaller than that of WeWork.

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Nov 9, 2019

Wow, another #disruptive post from some ex-wannabe banker (fresh out of tech bootcamp, bet) proselytizing to us about how they're on the cusp of making a Turing-Complete HTML UI that can perform strategic advisory for global institutions.

If you guys are so fucking good at finance, why are all of you hemorrhaging hundreds of millions of dollars a year and suckling at the teat of bloated growth capital funds?

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Nov 10, 2019

I think whats going to happen, which we are seeing already, is that top programmers will make the same or more than bankers. The leverage-ability of technology is increasing to a huge degree. One superior programmer at google capable of designing a superior distributed system/algorithm is worth 100M or more a year to them. They already have programmers they have paid that much in a year

Nov 10, 2019

So will tech become the quickest way to move into the highest tax bracket? The last 25-40 years were filled with the media talking about how bankers on wall street get paid enormous amounts of money and hedge fund managers buying yachts etc, will that be forgotten and techies become the new titans?

Nov 11, 2019

I think tech is an extremely reliable way to make 500k a year by ~32 without an elite degree and without working over 50 hours a week

Nov 10, 2019

my salary just keeps getting higher though 0_o

What concert costs 45 cents? 50 Cent feat. Nickelback.

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Nov 10, 2019
jessivey:

At the junior level, investment bankers engage in highly repetitive tasks, and although each deal is different, the tasks can easily be automated. As technology becomes more sophisticated and learns to have human elements, it will also eventually be able to replace those in the senior ranks. What are your thoughts?

I used to think this way too early on but now I just don't see it happening. Banking is too relationship-based. In fact the more you work in it the more you realize how people-centric the space really is. Companies want a person on the other end, not AI.

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Nov 11, 2019

ok BOOMER

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Nov 11, 2019

5 years ago everyone was worried that we would all lose our jobs due to outsourcing in India. Headcount may be reduced at at certain levels due to outsourcing and technology but banking is a relationship business so bankers will still be needed in the foreseeable future.

Nov 11, 2019
jessivey:

At the junior level, investment bankers engage in highly repetitive tasks, and although each deal is different, the tasks can easily be automated. As technology becomes more sophisticated and learns to have human elements, it will also eventually be able to replace those in the senior ranks. What are your thoughts?

This chach again? JFC, get a life.

Nov 11, 2019

It's not going to happen. Here's a few reasons why

1) All the super talented software people are not going to work at a bank.
What's prestigious in the eyes of the tech people is Microsoft, Google, FB, etc. Being a tech support at an investment bank is seen as low quality. Don't believe me? Look at this thread https://www.wallstreetoasis.com/forums/wasted-tale....
2) Investment banking is an inefficient industry, and always will be.
The barriers of entry to rising the ranks of IB is quite high. Breaking in itself is a challenge and as much as people try to trivialize it, working 80 hrs/ week for several years is a large sacrifice. By the time someone reaches MD, the last thing on their mind is how to make the life of an analyst easier by trying to automate some work. MD's are also paid based on deal flow not on the cost efficiency of getting the job done. Not to mention there is a joy that some get from bossing/controlling other people. That joy doesn't come when computers are involved

Array

Nov 11, 2019

IB is inefficient but what's changed is that it isn't nearly as profitable as it once was, so the inefficiency now matters. As for MDs, their view on tech changes pretty abruptly when they can't recruit great people, can't retain their best analysts (who leave b/c they don't like working in a stone-age industry), can't get juniors staffed on their pitches, or get told by clients that their competitors are using better tech.

Nov 11, 2019

Tech isn't going to change the prestige element i discussed earlier. The banking culture doesn't fit the free thinking techie. Imagine even trying to tell these people to come to work in dress shirt/pants lol. The best talent will still go to the Googles and Facebooks of the world.

Array

Nov 11, 2019

my thoughts are if technology can't tell the difference between someone walking a bike and empty space, investment bankers are safe for the time being. I'm optimistic on tech long term, I just think the amount of time it takes to get these sorts of things done is overstated by pro tech anti finance types who likely have never written a line of code (not saying that's you, this is the proverbial "you")

you may think it's rote accounting and pitchbook creation that is all IB does, which is by and large what the youngins on this forum end up doing for a few years, but the real reason IB can't be automated is it's a relationship business (read: sales), and that's incredibly difficult to automate and I'd argue not all that beneficial to automate. salespeople get paid a paltry % of the revenue they bring in to their firms, so I'd venture a guess that things where there's limited value add, high consequence for error, and repeatable patterns are the first to get automated.

watch out radiologists, pathologists, etc.

you can't make all that much money from developing software that puts accounting metrics into a presentation. you CAN make a shitload of money automating long haul trucking, improving medical diagnostics, etc., so that's where I think the first big moves will be.

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Nov 11, 2019

Haha if PDF could communicate with Quick-Books I would be out of a job. Now we have people saying AI will take over the most complex transactions on the planet. Slow down fart sniffing tech hippies.

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  • Prospect in IB-M&A
Nov 11, 2019

Which firm dinged you from FT IB?

Nov 11, 2019

While I agree with the general sentiment that this is at least a long way away, there are interesting breakthroughs occurring.

This paper shows how we are coming closer to having ML learn more akin to the human brain in a differential process rather than a discrete one.

"The three most harmful addictions are heroin, carbohydrates, and a monthly salary." - Nassim Taleb

Nov 11, 2019
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