Wall Street is full of people just shuffling papers around. Think of what a brokerage firm does. Essentially they take the ownership of an asset, and give it to someone else. Just for that paper shuffle they amass millions in fees.
The same applies to investment bankers. A lot of their work is advising companies on mergers or capital risings. A few signatures later, they pocket hundreds of millions dollars.
AI – New Breed of Competition
But both brokers and investment bankers are now facing threats from a new breed of competition — artificial intelligence (AI). AI already performs many of the jobs on Wall Street, such as those of traders, sales teams, portfolio construction, trade executers, analysts and modellers.
For the moment, the roll out of AI is extremely small. But it’s only the beginning. As reported by Bloomberg:
‘Traditional Wall Street jobs are already being disrupted by technology, and the emergence of artificial intelligence will drastically reorder the role of most humans in finance, according to former Goldman Sachs Group Inc. Chief Technology Officer Michael Dubno.’
‘We’re actually seeing the disintermediation of certain roles that were historic on Wall Street such as the salesperson.
‘You still need someone to start a relationship, but that relationship is not done by ‘Hey, let’s go to dinner. Hey, I have a great piece of research for you.’ It’s really ‘I have a great piece of data for you’.’
Dubno, former video game developer, sees AI’s ascendance within as little as five years’ time. It’s just enough time to get companies heading the next generation of AI. Some of these companies include Alphabet Inc. [NASDAQ:GOOG], BAIDU Inc. [NASDAQ:BIDU] and International Business Machine Corp. [NYSE:IBM].
‘The end-state of finance is similar to the end-state of almost every business: Almost every business is going to be automated to the point where very few people are involved in the running of it.
‘All firms have between 5 and 20 years in terms of what happens, but I think they’ll feel the effects of that way sooner.’
Junior Analyst, Money Morning
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