It's no secret that Wall Street's youngest bankers are well paid, with starting salaries of around $110,000 a year (not including bonuses). But let's face it, many of the tasks junior bankers spend their time on could very well be done by a robot.
Talk to any entry-level investment banker and they will tell you their day is full of tedious chores: Adding corporate logos to slideshows, fixing a messy million-row Excel sheet to look neat, and gathering information on a company or industry and summarizing it into a document.
"A lot of the work analysts do is very mundane. You're doing random Excel stuff or editing a deck or putting logos on a PowerPoint," said a first-year investment banking analyst who works on tech deals. "As a junior banker you don't critically think. You just do as you're told."
With artificial intelligence progressing by leaps and bounds, how will it impact the job of the junior banker? Insider spoke to six finance professionals, including an entry-level banker. We learned that AI could be good for junior financiers, making their jobs less tedious and maybe even improving their notoriously grueling schedules. But it could also mean firms will require fewer analysts on staff, making an already competitive industry even fiercer, and causing them to raise the bar when it comes to the skills required to break into the field.
To some extent, it's happening already. Deutsche Bank, for example, has begun testing out generative AI pilots, and Insider spoke to Tamara Bitticks, one of the execs involved in the project, to get her insights into how it's going and what the future holds. She said it's already helping junior bankers get their jobs done faster.
Whether you think about AI, it's advancing fast and will have major implications for our lives and work. Here's what it could mean for people who start off on the lowest rungs of the investment banking career ladder.
AI could make the junior banker job better
According to a recent study by consulting firm Deloitte, generative AI will unleash "a new era of productivity" for investment banking, boosting the productivity of front-office workers by as much as 35% by 2026, which could translate to additional revenue of at least $3 million per employee.
It also has the potential to improve the lives of junior bankers, who work long hours, sometimes upwards of 100 hours a week. Junior bankers can use the tech for a range of tasks, like creating pitch books, industry reports, and performance summaries, according to the Deloitte study. They can also use it to help generate deal structures, peer analysis, and term sheets.
Industry insiders 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 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.
Over at Deutsche Bank, executives like Bitticks are seeing the benefits firsthand. The bank has been running dozens of generative AI pilots and hiring hundreds of engineers to transform how its employees work across the firm. Some of the pilots aim to improve time-consuming and mundane tasks carried out by juniors in the corporate bank, which serves Deutsche's institutional clients, financial services firms, and investors.
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, Bitticks said. Making one of these reports — which brief the bankers on leadership changes, company performance, and relevant industry trends — usually takes a team of junior bankers a day or two to produce, said Bitticks, vice chair in Deutsche's corporate bank.
The new tool will allow these reports to be created in just a few keystrokes.
The technology will pave the way for "a new way of being a banker," Bitticks said, and enable juniors to focus on building up more analytical skills and soft skills.
"What I struggle with our juniors a lot of times is they're gathering the information, and they're so consumed with the gathering that they don't think about the analyzing," Bitticks told Insider in an interview at the Google Cloud Next conference in San Francisco last month.
"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 allows them to worry about the engagement itself instead of putting all the data together," Bitticks said.
The recruiter echoed that sentiment, saying AI could allow analysts to do "more of the associate-level work in the future."
Junior bankers may need new skills to survive
Peter Torrente, a partner at KPMG working with financial services firms, agreed that AI may require future generations of junior bankers 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," said Torrente. But it will also likely give bankers larger datasets to work with — whether it's a broader peer analysis or data that goes further back in time — which will lead to more investigating and analysis on behalf of the banker, he added.
The skills required to become a Wall Street trader or investment banker are also changing in other ways, said Bogdan Tudose of Training the Street (TTS), which preps up-and-coming finance and business students and new hires at client firms like Blackstone, JPMorgan, and Morgan Stanley.
"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."
While AI is expected to add to this burden, it could also help people acquire new skills faster. For example, Tudose's students are using tools like ChatGPT to dramatically reduce the time it takes them to produce code to automate a task.
In the past, a financial analyst might spend two to three hours creating the code "by first googling or reading forums, copying someone else's code, and then having to modify it for their own use case," said Tudose. "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."
It could also make Wall Street harder to break into
The proliferation of generative AI could also have its downsides. By turning over more of the mundane tasks to automation, AI also threatens to make the uber-competitive industry even harder to break into. The fewer tasks there are to be done by humans, the fewer junior workers firms will need.
"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."
Tudose of Training the Street says he's hearing these same concerns from some of his students. People who have already broken into the industry are excited about the technology because they see it improving their workflow. New hires are more worried about generative AI replacing them, Tudose said.
But he warned against buying too heavily into doomsday predictions. "Generative AI 'hallucination' is a real problem right now," he added, comparing it to the introduction of Excel, which had people predicting that accountants and financial analysts would be out of a job.
"Sure, it replaced some very low-entry jobs, but overall models have become more complex and powerful," Tudose said. "Tools such as generative AI will have the same impact. They will help automate some of the mundane, repetitive tasks so that analysts can focus on more value-add analysis and apply critical thinking to their models."
In other words, there will always be a need for humans to check the work done by 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 said.
The recruiter agreed — there will always be a need for some analyst roles, he said.
"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.
Years vs. months
In addition to Deutsche Bank's initiatives, Visa's tech chief wants to have every employee working with AI by the end of the year; Goldman Sachs is piloting AI to help its 12,000-strong engineer workforce code more efficiently; JPMorgan has a team of about 60 academics who focus purely on researching the possibilities of AI.
Though Wall Street's embrace of AI is accelerating, industry insiders predict it could be many years before financial firms widely adopt it.
A recent KPMG study found that 40% of financial services executives surveyed said their organization's IT and digital infrastructure would limit their ability to innovate and adapt to advancements in AI. Financial firms built on legacy systems come with a price (for maintenance), leaving less money on the table to pursue new technologies, the survey found.
"Banks are moving more work to cloud environments, where they would have more flexibility and agility in adding new capabilities such as LLM models, but the process is slow," the KPMG report says. "Banks can also face organizational barriers that limit their agility versus fintech startups. As a result, they may struggle to keep pace with the rapid innovation and product development cycles of cloud-native and AI-native startups, losing market share to these more agile competitors. Legacy asset managers face some of these same challenges."
The first-year analyst told Insider that he isn't very worried about AI taking his job because the finance industry is so "slow" that it'll take a long time to see actual implementation at an industry-wide level. By the time that happens, if it does, he'll be at his next gig on the buy side.
The investment banking recruiter agreed.
"I don't want to be naive because technology is obviously moving very quickly," he said. "I just don't know how quickly the adoption of those things will be across all firms. Banks are such regulated environments and it probably has to go through so much regulatory discretion to really ultimately be implemented across all firms."