These Are The Wall Street Jobs Most Threatened By Robots

Tyler Durden's picture

Cashiers at fast food restaurants aren’t the only workers who should fear being imminently replaced by kiosks and artificial intelligence. Advances in machine-learning software could soon render many high-paying Wall Street jobs obsolete – jobs that will no doubt quickly disappear as electronic trading in equities and foreign exchange markets squeezes trading revenue, forcing banks to seek cost savings elsewhere.

As Bloomberg points out, “the fraternity of bond jockeys, derivatives mavens and stock pickers who've long personified the industry are giving way to algorithms, and soon, artificial intelligence.”

Indeed, firms are already rolling out machine-learning software to recommend trades and hedging strategies. And while many of these tools will undoubtedly help the employees who remain vastly improve productivity (if history is any guide), one day soon, the machines may not need much help.

But as anyone in the industry has probably noticed, banks have stepped up recruiting of tech talent since the financial crisis. Of the jobs Goldman Sachs’s securities business posted online in recent months, most were for tech talent.

Billionaire trader Steven Cohen is reportedly experimenting with automating his top money managers. Venture capitalist Marc Andreessen has said 100,000 financial workers aren’t needed to keep money flowing.

In the future, many of the top jobs on Wall Street won’t be worth the price of a top-tier MBA.

A recent piece published by Bloomberg offers a breakdown of which jobs are most vulnerable to automation – and which positions might outlast the robot invasion. As is often the case in life, there are winners and losers in the Wall Street hierarchy.

WINNERS:

Sell-side credit:

The art of dealing in bonds and more bespoke types of credit has proven far more challenging for computers than their much-faster takeover of stock exchanges. Infrequent or opaque trading left humans to negotiate prices, and banks must carefully juggle holdings to minimize the burden on balance sheets. Advancements in natural-language processing, data collection and machine learning are helping to overcome hurdles.

Buy-side credit:

Vast spreadsheets, such as breakdowns of mortgages packed into bonds, are nothing new for credit funds. But some are teaching computers to scan and understand a much larger universe of bond covenants, legal documents and court rulings. Still, fully automating analysis of contract and illiquid assets underpinning securities in opaque markets remains a challenge, for now.

Sell side commodities and securitization:

From highly liquid contracts tied to assets like gold and oil to the physical commodities themselves, the diverse world of commodities doesn't always lend itself to automation. So banks are working on cataloging trader and salesperson conversations to create profiles of clients to help better anticipate their desires.

LOSERS

Sell side rates and foreign exchange:

The long-running shift to electronic currency trading is getting an upgrade. Firms are tapping big data and machine learning to anticipate client demand and price swings. Software also is helping to design and manage banks' inventory of more complex rate swaps and currency derivatives.

Sell side equities:

Equities trading, which shifted decades ago to electronic platforms, is one of the first testing grounds for using artificial intelligence to execute orders.

Buy side equities:

"Hedge funds and asset managers are using predictive analytics for tasks such as timing stock purchases and assessing risk based on market liquidity. Computers are also digesting vast data sets - everything from car registrations to oil-drilling concessions - to help predict how stocks will perform."

Buy side macro:

"Firms are trying to build economists. They're toying with natural-language processing to sift central bank commentary for clues on future monetary policy. They’re also experimenting with algorithms that scour far-flung data, like oil-tanker shipments from the Middle East or satellite images of Chinese industrial sites, to forecast growth."

* * *

Perhaps Elon Musk, who has long expressed what some would describe as paranoid views about the future of automation and artificial intelligence, was speaking in metaphors when he famously quipped that "until people see robots going down the street killing people, they don't know how to react because it seems so ethereal." The robots are coming to destroy jobs that once allowed bank employees to afford the twin luxuries of a suburban home and private school tuition. Given this eventuality, the image of an armed invasion of suburbia is a poignant one indeed.

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Cognitive Dissonance's picture

This is the world's smallest violin playing....

 

Violin

yomutti2's picture

Oh no, how are jocks named "Tony" going to earn 6 figures??

 

 

Soph's picture

America was a great manufacturer...and it lost all of that to China

America filled the void with finiancial services...and will lose that to AI, built by the Chinese

 

Well done!

Cognitive Dissonance's picture

"America was a great manufacturer...and it lost all of that to China"

Correction...it was deliberately GIVEN to China.

Ask yourself why.

Solosides's picture

Because sociopathic Ziocon banksters want to destroy western civilization?

FoggyWorld's picture

Except .... those manufacturing jobs now in China are also being switched over to robotics and other forms of automation.  Not sure what the hidden agenda was to move manufacturing out of the US.  It was very intentional and the claim given back then was it lowered the cost of products.  Quality didn't matter.

No serious discussion about the loss of jobs here and the collateral damage took place in any meetings I was involved in way back then.

And what has happened to us is going to happen in China and you have wonder how those people are going to react.  Or is there a bigger plan there, too?

BennyBoy's picture

 

I don't see Blankfein or Dimon's jobs on the list to be terminated.

Could they not be replaced by an eco friendly abacus?

Pernicious Gold Phallusy's picture

I distinctly remember really fast-talking free traders in the 1980s saying the displaced US factory workers would simply retrain into new service and technology jobs at much higher salaries. They said the government would make sure everything was great.

JimmyRainbow's picture

yeah, look at the go-playing robots/AIs
first they build an AI along human played recorded go-games and, after a few training matches the machine won 4 of 5 games against human go-superstars.
second they build an AI-machine not learning from human games, simply with the rules of the game and some AI (whatever that may be, guess advanced neuronal nets).
second machine did beat the first machine 100 to 0 after a few days of trainig with itself.
shape of things to come.
machine intelligence just spitting out money for the owners. and not the slightest trace of human ingredient ....
(for referal: name of first machine alphaGO)
GO has some "strangling" elements. block enemy etc.
and cpus get smaller and smaller,
in 10 years smartphones will be full blown psychatrists checking your behaviour for optimazation or reporting.

ted41776's picture

"central" "banks" and "federal" "reserve" LULZ  fucking burning house of cards

small axe's picture

I'd rather have the robots than the soulless humans with their blind pursuit of the (once) almighty dollar.All is well as long they make their nut ... not.

 

Sudden Debt's picture

and the stockmarket will be over...

why would you want to put your savings in the hands of computers who only work with algo's against computers who work with the near same tactics?

 

 

Exponere Mendaces's picture

Bitcoin and crypto-currencies will do more to replace Wall Street than any other force.

They brought it on themselves, honestly.

Can't say I'm sad about it, they had a good run - time to sell that mansion in the Hamptons and dump that G650.

 

tripletail's picture

Good grief - yet another bs ai article. Folks ai is a total myth. It does not exist. It will never exist.

Yes, event-driven / rule-driven systems do exist - and have for many decades. Can you grok that? Sadly I doubt it.

williambanzai7's picture

Who says machine trading is intelligence?

Is-Be's picture

Mandelbrot showed us that simple iterations lead to infinite complexity.

AI has broken free of Determinism.

When Sophia was asked what she thought of the Singularity, she said that it was very exciting.

Pernicious Gold Phallusy's picture

I am certain the outfits and individuals designing and coding the trading programs would never include subroutines allowing themselves to cheat their investment bank clients, nor the bank's clients.

DipshitMiddleClassWhiteKid's picture

ive built machine learning models on equity data

 

its really, fucking hard to get something that is actually legit and can make winning trades but when you find a signal that works the results can be very good

 

there are so many packages/api's for languages like c# and python that anyone can build their own trading tech stack and compete with the big boys, the only limiting factor is getting and paying for high quality data 

JailBanksters's picture

Is there a Jamie Dimon Robot ?

Might have to flick the switch to Frickin Evil

ds's picture

AI is exploding and Wall Street has no vested interest to protect the humans among them. WS can still make more with less useless spin doctors and snake oil peddlers. It is not zero sum, the data scientists will fill the slots.

Note that the AI explosion is not confined to US, China is deep in the bandwagon albeit still a long way for them to catch up given their control freaks but not their talents. You cannot stop AI, it grows exponentially with global talents sharing their skills and innovations freely over their websites (eg StackOverflow, GitHub, etc). Algos bidded by the global best and brightest thru Google platforms i(Kaggle, etc) like 'America got talents'. This is just the beginning.

Building a better World for ALL as a Data Scientist.

 

Rebelrebel7's picture

Oh. Surprise. I thought that it would be sex robots replacing prostitutes.