Artificial Intelligence and its Future in Investment Banking
Artificial intelligence is continually growing and its applications continue to expand. The hope in the near future for AI to have the ability to model the human mind and psyche but what does that mean for finance? Investment banks across the world have already begun using AI like Goldman Sachs, who, through their Marcus branch, is providing transparency into consumer actionable insights while managing their finances. But beyond AI’s current uses where can it go from here?
There are so many different uses for AI in the future of finance but my penchant for investment banking has led to me to its future in investment banking and the consequences on the industry. Asset management is an industry that has not had any major shake-ups, technologically speaking in recent times but AI will change that. Investment banks typically have three arms: Sales and Trading, Corporate Finance, and Research. AI would influence all three of these arms in different fashions but significantly nonetheless.
In the Sales and Trading department, the need for client to trader conversations will become almost completely nonexistent with the introduction of Natural Language Processing (think more advanced Siri). This would allow clients to make trades without needing to call their traders. This would make trading much more efficient, though, it would cost quite a few jobs in the future, but that itself is the cost of advancement.
In Corporate Finance the tedious jobs of collecting information and files from the SEC and other documents will be completely transformed into quick tasks performed by AI.
However, the most exciting aspect for me, is the introduction of AI into research because it will completely streamline the process of examining different companies based on mathematical models, news surrounding the company, and many more factors while combining them to establish a basis for the possibilities for the company.
While the implementation of Artificial Intelligence is to benefit predictions, it will also assist companies in cutting their costs, by, surprise surprise, cutting the jobs of those working in investment banking. It is estimated that 4,000 jobs will be cut in investment banking by 2025. Contrarily, there will be many jobs created due to the need for programmers with an understanding of finance and data analytics.
As of right now, it does not seem like AI will be replacing many humans anytime soon simply because of the required human interactions necessary in investment banking. However, as we look towards the not so distant future we have to understand how AI will benefit us in the investment banking world. AI’s growth will happen and it is a matter of how prepared we will be for that growth and if we will be able to harness its true power.
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