In the world of finance, junior bankers often find themselves entangled in a web of repetitive tasks that are time-consuming and, let’s admit it, a bit monotonous.
The question looming over Wall Street now is whether these tasks could be automated by artificial intelligence (AI).
In this article, we will delve into the potential implications of AI on junior bankers’ roles, discussing how it might transform their jobs, the skills they need to adapt, and the competitive landscape it might create.
AI’s Promise: A Boon for Junior Bankers?
Generative AI, as predicted by consulting firm Deloitte, is expected to usher in a “new era of productivity” for investment banking. This technology could boost the productivity of front-office workers by up to 35% by 2026, potentially translating to an additional revenue of at least $3 million per employee. So, how can this benefit junior bankers?
Junior bankers, often buried under piles of work and 100-hour workweeks, could leverage AI to streamline various tasks.
This includes creating pitch books, industry reports, performance summaries, and even generating deal structures, peer analysis, and term sheets, according to the Deloitte study. The result? Fewer hours spent on mundane tasks and more on value-added work.
“It could be a good thing for banking if there are some parts that are more automated because it’ll get rid of some of the work that takes hours and hours for some of these junior guys to go through,” said a Wall Street recruiter who specializes in placements in investment banking.
“It could be good for the hours,” added the first-year analyst. Both the analyst and the recruiter asked to remain anonymous because they weren’t authorized by their companies to speak to the press.
Industry insiders have shared their optimism about AI’s potential to alleviate the workload. Wall Street recruiters and analysts have anonymously expressed that automation could lead to better work hours and more stimulating tasks.
A Glimpse into Deutsche Bank’s Progress
Deutsche Bank has already ventured into the realm of generative AI pilots. Executives like Tamara Bitticks have observed firsthand how AI can expedite tasks traditionally handled by junior bankers. One remarkable example is the automation of report generation for client meetings. Previously, creating these reports took junior bankers a day or more. Now, with AI, they can be generated with just a few keystrokes.
This shift towards automation is expected to redefine the role of junior bankers. With AI handling the gathering of data, junior bankers can focus on honing analytical skills and soft skills, adding more value to their roles.
Skills of the Future: Adapting to AI
AI’s rise may necessitate a shift in the skillset required for junior bankers. Peter Torrente, a partner at KPMG, suggests that junior bankers will need to enhance their analytical abilities, becoming proficient in data interpretation and extraction of insights. While AI will automate initial data analysis, bankers will be tasked with more in-depth investigations and analysis.
Moreover, the financial industry is evolving in other ways as well. Coding is becoming a fundamental skill for bankers and financial analysts. Familiarity with coding enables professionals to automate processes and work with large datasets, a necessity in today’s financial landscape.
“Coding is becoming an essential skill for all bankers and financial analysts to have,” explained Tudose. “They don’t need to be full-on computer scientists or engineers; however, they need to know some of the fundamentals so they can automate some of their processes and also deal with large data. In this day and age, some of the data sets our PE and bank clients are dealing with are too large to even open up in Excel.”
AI as a Skill Accelerator
Interestingly, AI itself can aid in skill development. Tools like ChatGPT have made it easier for finance students and new hires to produce code quickly, reducing the time it takes to automate tasks. This expedited learning process can help professionals keep up with the evolving demands of the industry.
“Now, with tools such as ChatGPT, as long as you provide it the correct prompt, they can get some initial draft code in a matter of seconds to get them started.”
The Dark Side of Automation: Job Competition
While AI holds the promise of making junior bankers’ lives better, it also brings a potential downside: increased competition for jobs. As AI takes over repetitive tasks, financial firms may require fewer junior analysts.
“In the future maybe instead of 10 analysts, you only need five,” said the first-year analyst.
“It’s good for people in the industry. I guess it’s bad for the people trying to break into the industry,” the analyst added. “There are going to be fewer roles, so it will be hyper-competitive.”
This decrease in job opportunities could make breaking into the finance industry even more challenging. New entrants may find themselves facing heightened competition for a limited number of positions. This shift is a concern echoed by industry insiders.
The Human Touch in Finance
Despite AI’s capabilities, one thing remains clear: there will always be a need for human oversight. AI models, while powerful, are not infallible. Humans will continue to play a crucial role in verifying and fine-tuning AI-generated work before presenting it to clients. The human touch ensures accuracy and reliability, making it an indispensable aspect of the finance industry.
“At the end of the day, regardless of if there is a model or a presentation that was built by AI, I still think that they’re going to require the human touch to be behind that before showing it to the client realistically,” said the recruiter.
The Road Ahead: Gradual Adoption
The financial industry’s journey towards AI adoption may be slow but steady. Legacy systems, organizational barriers, and regulatory considerations can hinder rapid implementation. However, several prominent financial institutions have already begun their AI initiatives, with the aim of staying competitive in a changing landscape.
In the ever-evolving world of finance, AI’s role is poised to grow. Junior bankers can look forward to a more streamlined workflow and opportunities to develop higher-level skills.
Yet, they must also be prepared for increased competition in a field that is constantly adapting. While AI may reshape the industry, it cannot replace the human touch and expertise that have long defined finance.
What is generative AI, and how does it benefit junior bankers?
Generative AI is a technology that can automate various tasks in investment banking, making the work of junior bankers more efficient and less mundane.
How will AI impact the skill requirements for junior bankers?
AI’s rise will necessitate enhanced analytical skills and coding proficiency among junior bankers, allowing them to work with data and AI more effectively.
What challenges might AI pose to newcomers in the finance industry?
AI’s automation of tasks could lead to increased competition for junior banking positions, making it more challenging for new entrants to break into the industry.
Is the adoption of AI in finance expected to be swift?
The adoption of AI in finance is expected