How AI will change the job of the junior banker and raise the bar to entry
- AI could improve the lives of investment bankers by taking on some tedious tasks.
- It could also make the field harder to break into and alter the skills required for entry.
- Deutsche Bank is testing tools that could reduce some junior banker tasks to seconds from days.
It’s no secret that Wall Street’s newest bankers are well compensated, with starting salaries of around $110,000 per year (before bonuses). But, let’s face it, many of the tasks that junior bankers perform could very well be performed by a robot.
Any entry-level investment banker will tell you that their day is filled with tedious tasks like adding corporate logos to slideshows, tidying up a messy million-row Excel sheet, and gathering information on a company or industry and summarizing it into a document.
“A lot of what analysts do is routine. “You’re doing random Excel stuff, editing a deck, or putting logos on a Powerpoint,” said a first-year investment banking analyst who works on technology transactions. “As a junior banker, you don’t think critically. You simply do as you are told.”
With artificial intelligence advancing at such a rapid pace, how will it affect the role of the junior banker? Insider interviewed six finance professionals, including a new banker. We discovered that AI could benefit junior financiers by making their jobs less monotonous and possibly even improving their notoriously grueling schedules. However, it is possible that firms will require fewer analysts on staff, making an already competitive industry even more competitive and causing them to raise the bar in terms of the skills required to break into the field.
It’s already happening to some extent. For example, Deutsche Bank has begun testing generative AI pilots, and Insider spoke with Tamara Bitticks, one of the executives involved in the project, to get her perspective on how things are going and what the future holds. She claims it is already assisting junior bankers in completing their tasks more quickly.
Whatever you think about AI, it’s advancing quickly and will have significant implications for our lives and jobs. Here’s what it could mean for those starting out at the bottom of the investment banking career ladder.
AI has the potential to improve the job of a junior banker.
According to a recent Deloitte study, generative AI will usher in a “new era of productivity” for investment banking, increasing the productivity of front-office workers by up to 35% by 2026, translating to at least $3 million in additional revenue per employee.
It also has the potential to improve the lives of junior bankers, who often work more than 100 hours per week. According to the Deloitte study, junior bankers can use the technology for a variety of tasks such as creating pitch books, industry reports, and performance summaries. It can also be used to assist in the creation of deal structures, peer analysis, and term sheets.
Insiders in the industry agree.
“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 investment banking placements.
“It could be good for the hours,” the rookie analyst added. Both the analyst and the recruiter requested anonymity because they were not authorized to speak to the press by their respective companies.
Executives at Deutsche Bank, such as Bitticks, are seeing the benefits firsthand. The bank has conducted dozens of generative AI pilots and hired hundreds of engineers in order to transform how its employees work across the organization. Some of the pilots seek to improve time-consuming and mundane tasks performed by juniors in Deutsche’s corporate bank, which serves institutional clients, financial services firms, and investors.
According to Bitticks, one tool set to launch at the beginning of the year will use AI to generate reports senior bankers need to prepare for client meetings. A team of junior bankers typically takes a day or two to produce one of these reports, which brief bankers on leadership changes, company performance, and relevant industry trends, according to Bitticks, vice chair in Deutsche’s corporate bank.
The new tool will make it possible to create these reports with just a few keystrokes.
The technology will pave the way for “a new way of being a banker,” according to Bitticks, and allow juniors to focus on developing more analytical and soft skills.
“What I struggle with our juniors a lot of times is they’re gathering information, and they’re so consumed with gathering that they don’t think about analyzing,” Bitticks told Insider last month at the Google Cloud Next conference in San Francisco.
“AI gives them these great tools to know what all the data is behind the scenes and to come in fully up to speed on what the client’s doing, and it allows them to worry about the engagement itself instead of putting all the data together,” Bitticks explained.
The recruiter agreed, saying that AI could enable analysts to do “more of the associate level work in the future.
To survive, junior bankers may need to learn new skills.
According to Peter Torrente, a partner at KPMG who works with financial services firms, future generations of junior bankers may need to hone their analytical skills and become better at understanding data and extracting insights.
“It will allow junior bankers to operate at a higher level with that first pass of analysis being prepared by the technology,” Torrente explained. However, it will most likely provide bankers with larger datasets to work with — whether it’s a broader peer analysis or data that goes further back in time — leading to more investigating and analysis on the banker’s behalf, he added.
According to Bogdan Tudose of Training the Street (TTS), which prepares aspiring finance and business students and new hires at client firms such as Blackstone, JPMorgan, and Morgan Stanley, the skills required to become a Wall Street trader or investment banker are changing in other ways.
“Coding is becoming an essential skill for all bankers and financial analysts to have,” Tudose explained. “They do not need to be full-fledged computer scientists or engineers; however, they must understand some fundamentals in order to automate some of their processes and deal with large amounts of data.” Some of the data sets our private equity and bank clients deal with are now too large to open in Excel.”
While AI is expected to add to this burden, it may also help people learn new skills more quickly. Tudose’s students, for example, are using tools like ChatGPT to drastically reduce the time it takes them to write code to automate a task.
Previously, a financial analyst might have spent two to three hours writing code “by first googling or reading forums, copying someone else’s code, and then having to modify it for their own use case,” according to Tudose. “Now, with tools like ChatGPT, if you give it the right prompt, they can get some initial draft code in seconds to get them started.”
It could also make Wall Street harder to break into
The spread of generative AI may have unintended consequences. By offloading more mundane tasks to automation, AI threatens to make the already-competitive industry even more difficult to enter. The fewer tasks that must be performed by humans, the fewer junior workers firms will require.
“In the future, maybe instead of 10 analysts, you only need five,” the first-year analyst speculated.
“It’s good for industry people.” “I suppose it’s bad for newcomers to the industry,” the analyst added. “Because there will be fewer roles available, competition will be fierce.”
Tudose of Training the Street reports that some of his students have expressed similar concerns. People who have already made a name for themselves in the industry are excited about the technology because it will improve their workflow. Tudose believes that new hires are more concerned about generative AI replacing them.
However, he cautioned against putting too much stock in doomsday predictions. “Generative AI’hallucination’ is a real problem right now,” he added, comparing it to the introduction of Excel, which caused people to predict that accountants and financial analysts would lose their jobs.
“Sure, it replaced some very low-entry jobs, but overall models have become more complex and powerful,” Tudose explained. “Tools like generative AI will have the same effect.” They will aid in the automation of some of the mundane, repetitive tasks, allowing analysts to focus on more value-add analysis and critical thinking in their models.”
In other words, humans will always be required to double-check the work of AI.
“Some of our participants joke in our classes that ChatGPT is currently a’glorified intern’ who is overconfident in their answer but you still have to fix up their mistakes and double-check for any incorrect information,” Tudose explained.
The recruiter agreed, saying that there will always be a need for some analyst positions.
“At the end of the day,” the recruiter said, “whether there is a model or a presentation that was built by AI, I still believe that they will require the human touch to be behind that before showing it to the client realistically.”
Years vs. months
In addition to Deutsche Bank’s initiatives, Visa’s tech chief wants every employee to be using AI by the end of the year; Goldman Sachs is testing AI to help its 12,000-strong engineer workforce code more efficiently; and JPMorgan has a team of about 60 academics who are solely focused on researching the possibilities of AI.
Though Wall Street’s embrace of AI is quickening, industry insiders believe it will be many years before financial firms widely adopt it.
According to a recent KPMG survey, 40% of financial services executives said their organization’s IT and digital infrastructure would limit their ability to innovate and adapt to AI advancements. The survey discovered that financial firms built on legacy systems have a cost (maintenance), leaving less money on the table to pursue new technologies.
“Banks are moving more work to cloud environments, where they would have greater flexibility and agility in adding new capabilities such as LLM models, but the process is slow,” according to the KPMG report. “Banks, like fintech startups, may face organizational barriers that limit their agility.” As a result, they may struggle to keep up with cloud-native and AI-native startups’ rapid innovation and product development cycles, losing market share to these more agile competitors. Some of the same issues confront legacy asset managers.”
The first-year analyst told Insider that he isn’t concerned about AI taking his job because the finance industry is so “slow” that it will take a long time to see widespread implementation. He’ll be on the buy side by the time that happens, if it happens at all.
The recruiter for investment banking agreed.
“I don’t want to be naive, because technology is obviously moving very quickly,” he explained. “I just don’t know how quickly those things will be adopted across all firms.” Banks are highly regulated environments, and it is likely that it will require significant regulatory discretion before being implemented across all firms.”
