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

jessivey's picture
Rank: Baboon | 149

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 hope the stupidity of the users named momnpopshop and heartcore did not contaminate me. momnpopshop pointed out my lack of sources, but sources are unimportant in this case due to the fact that this is an opinion thread, not a factual one. Even if I did provide a source, it would not have been relevant because it would have been speculation only. I HOPE STUPIDITY IS NOT CONTAGIOUS. I HOPE I AM NOT CONTAMINATED BY THE STUPIDITY OF LESS INTELLIGENT USERS.

Comments (80)

Nov 8, 2019

Nah

    • 2
Nov 8, 2019

Elaborate?

Array

    • 1
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.

Array

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Nov 14, 2019

the AI BLOCKCHAIN will DISRUPT and INNOVATE your MOM

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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 12, 2019

" If AI can't sell me a pair of pants or box of toothpicks (and so far, it can't)"

Lol, have you heard of Amazon? Maybe you don't shop there, but a lot of people do, and when you type in toothpicks, it's an AI-powered recommendation engine that suggests with SKUs to buy, not a person.

Obviously a long way to go between toothpicks and premium professional services.

Nov 12, 2019

At that point I've already decided I want toothpicks. And the friction between typing that into Amazon's search window and adding the recommended product to my cart/checking out is almost zero.

Even if we get to some future state where every page of every pitch is accurately produced by algorithms, mandates are going to go to the bankers who show up in person, know the CEO's motivations, and can perfectly tailor the voiceover.

Which brings me back to my original point, which is that capital markets is ripe for this sort of thing. M&A, with so many complex, nuanced, and totally unstructured but immensely consequential data points, is far less vulnerable.

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 12, 2019

If I am a founder of a company, why would I want my company to spend money on golf unless there is a need to?
Also, anything is possible.

Array

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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.

Array

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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?

Array

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

Array

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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

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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 12, 2019

why is it less profitable than it once was?

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.

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

2010 called, it wants its trendy claims back.

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Nov 11, 2019

Tech will never replace investment banking, says even the tech employees on Blind. I think tech will help automate a lot of repetitive tasks and be more present in the finance industry as a whole, but it will never replace the relationships aspect of banking.

    • 1
Nov 12, 2019

Once the "start up tech" bubble bursts, which it will in the next year or two, there won't be posts like this until at least 2035+. As a society, we overestimate what can be done in 5 years and underestimate what will be accomplished in 10.

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Nov 13, 2019

I disagree. I agree I think there will be a contraction of the amount of money companies can raise, as we've seen gross negligence of this. However, I think technology will move forward so long as people make it move forward. I don't buy into the mythology of the college dropout evolving the world. Even Bill Gates admits that his initial ideas were not that original, he just executed better on them. So those garage band startups will fail unless they have a great business model. Even some of the great ones will fail, such is the nature of capital contractions.

With that said, I think AI will accelerate more rapidly than we realize. The limitations are on the intervals of time needed to store the data in the discrete models, but the article I pointed to above shoes a more integral and differential approach to AI. That is a lot more akin to how humans learn. We continuously take input of data, process it, and perform an output. I read about people getting killed in Syria, I don't vacation there. I learned about eating healthy and working out, I do that and live longer. This is very basic. The rate at which AI is able to learn things on it's own is the key here. I don't have an answer and neither do you.

TLDR: I agree IB won't be wiped out anytime soon with the data we currently have, but I think eventually we, as a species, will be forced into roles that are either creative, interpersonal, and/ or highly technical. The key word is eventually. None of us know for certain- if we did we wouldn't be commenting on this forum.

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

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  • Analyst 1 in RE - Comm
Nov 13, 2019

Think about the world we live in today. It is virtually exactly the same as it was 10-15 years ago. Even without regulations, in the grand scheme of things, tech hasn't done even half as much as it's been hyped to have done. With regulations (100% will come shortly), I am pretty skeptical.

Nov 13, 2019

Well I sell software that automates a lot of jobs. If any MDs want to see if they can replace their analysts shoot me a message. Chances are your bank is already a client of ours and you can pull of your implementation internally.

Array

Nov 13, 2019
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"The three most harmful addictions are heroin, carbohydrates, and a monthly salary." - Nassim Taleb

Nov 13, 2019
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Dec 6, 2019
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