Wall Street and AI, rapidly evolving and increasing use cases

SEOToolsKit.co blog says, Four years ago, I discovered that former Goldman Sachs CFO and tech advocate Marty Chavez (currently a partner and vice chairman at Sixth Street) said that being able to code is "writing in English" for traders. He wrote that he predicted that it would become just as important.

At the time, Citigroup echoed Chavez's declaration, announcing plans to aggressively hire about 2,500 technology professionals, including programmers, engineers and data analysts, to fill its trading and investment banking divisions according to Funkyadjunct.

The convergence of financial services and technology continues to be a growing trend as investment banks leverage AI in their operations. According to a study by McKinsey & Co., generative AI is estimated to generate between $200 billion and $340 billion in added value across the banking industry. Read More on cavalerie.net.

How banks are using AI

The securities industry is using AI to automate and streamline tasks, from coding and compliance monitoring to portfolio analysis, increasing productivity and effectiveness.

Banks are developing AI-powered tools to help bankers, traders, and wealth managers make better decisions. This includes things like AI-driven stock picking and real-time customer insights. Financial institutions are trialling generative AI models like ChatGPT to support content creation, question answering, and various banking operations.

AI helps relationship managers collect, organize, and aggregate information to generate personalized content and insights for customers. AI-driven natural language processing (NLP) and generative models analyze data from various sources to infer market sentiment and help clients adjust their investment strategies.

This technology, which is undergoing remarkable development, evaluates and predicts the impact on risks such as interest rates, credit, cash flow, and default, and supports responses in line with regulations such as financial soundness examinations (stress tests). Generative AI pulls data from across the organization to support the creation of documents such as ESG reports and audit reports.

AI implementation status at major banks

JP Morgan

In 2023, JP Morgan applied to the US Patent and Trademark Office to register a trademark for a product called IndexGPT . This technology is aimed at selecting investments for customers.

morgan stanley

Working closely with OpenAI, creators of ChatGPT, Morgan Stanley last year introduced a chatbot to assist financial advisors and their teams. The tool, called AI@Morgan Stanley Assistant, gives the firm's financial advisors quick access to a robust database of approximately 100,000 research reports and documents, CNBC reports. Provide access. The bank is also developing technology that will allow users to summarize meetings, draft follow-up emails, schedule appointments, and more, according to Reuters.

wells fargo

Earlier this year, Wells Fargo CIO Chintan Mehta said that Fargo, the bank's virtual assistant app powered by Google Cloud AI, could process about 100 million interactions a year if the technology continues to improve. He said it could happen. In April 2023, Wells Fargo participated in Stanford University's Financial Services and AI Corporate Partnership Program , and more than 4,000 employees received training through a series of webinar lectures.

deutsche bank

In 2022, Deutsche Bank announced a multi-year partnership with NVIDIA to help bring AI and machine learning to its business. According to the bank's official statement, the technology "helps traders manage risk and execute more scenarios faster and at scale, while also improving energy efficiency."

goldman sachs

George Li, Goldman Sachs' co-head of applied innovation, revealed at last year's Reuters NEXT conference that the bank is currently working on a number of technology projects. According to Lee, Goldman's generative AI project includes the ability to write code with English commands and generate documents.

Key ways hedge funds and private equity leverage AI

As competition among private equity (PE) firms increases, they are seeking innovative approaches to identifying investment opportunities. This includes leveraging AI-powered algorithms to scrutinize various channels based on specific criteria to effectively create a list of companies ideal for equity investment. This allows companies to proactively search for opportunities, rather than just relying on their human networks. AI can also analyze data about company performance, find correlations and patterns in large and complex data sets, market sentiment, web traffic, and social media activity to rank potential investments. , also used for prioritizing. The technology helps portfolio managers gain insight, analyze financial statements, predict trends and spot fast-moving trends, allowing money managers to make more informed investment decisions. Finally, you can test your trading strategies by simulating the market environment.

Disadvantages of introducing AI

The introduction of AI is a double-edged sword for employment in the financial industry. On the one hand, new roles are expected to emerge in areas such as data engineering, machine learning, and AI governance. Financial institutions are already actively recruiting for these AI-related roles. According to Evident's AI Talent Report

, 40% of banking industry hires from October 2022 to March 2023 were for AI-related roles. Meanwhile, AI is predicted to automate or eliminate up to 300 million jobs globally, including in banking roles such as administrative support, legal, and treasury operations. This could result in large-scale job losses in the financial services industry and the need to reskill many professionals.