Major Wall Street banks, including Goldman Sachs and Morgan Stanley, are considering significant cuts to their junior analyst hiring, with some suggesting reductions of up to two-thirds, as artificial intelligence (AI) increasingly takes over tasks traditionally performed by entry-level employees, according to a report by The New York Times.
The rise of AI has led to a potential paradigm shift in the finance industry, with banks testing software under code names like “Socrates” that can perform tasks such as creating presentations and summarising data in a matter of seconds, a job that would typically take junior analysts hours or even days to complete.
Christoph Rabenseifner, Deutsche Bank’s chief strategy officer for technology, data, and innovation, told The Times, “The easy idea is you just replace juniors with an AI tool.” However, he acknowledged that human involvement would still be necessary.
The potential cuts to junior analyst positions could have far-reaching implications for the future of finance careers. Investment banking has long been known for its gruelling work hours and high-pressure environment, with many young professionals viewing it as a stepping stone to more lucrative positions in the industry.
According to The Times, banks are considering reducing the number of junior analysts they hire and potentially slashing the salaries of those brought on board, given that AI assistance may significantly reduce their workload.
While Goldman Sachs stated that it has no plans to alter its incoming analyst classes, the bank acknowledged that it is in the early stages of exploring AI technology and is pleased with the results thus far. Deutsche Bank and Morgan Stanley declined to comment on potential job cuts.
The impact of AI on the workforce extends beyond Wall Street, with estimates from various consulting firms painting a grim picture for employment across industries. Goldman Sachs estimates that around 300 million workers could be significantly impacted by AI, while McKinsey projects that 12 million workers could be displaced entirely by 2030. Accenture has an even more extreme outlook, forecasting that AI could replace or supplement nearly 75% of all working hours in the banking sector alone.
Despite these concerns, some industry executives remain optimistic about the potential for AI to enhance job roles and make work more interesting for those who remain. JPMorgan’s head of investment banking, Jay Horine told The Times, “AI will enable us to do tasks that take 10 hours in 10 seconds. My hope and belief is it will allow the job to be more interesting.”
