The robot revolution is coming for Wall Street traders
Paramount Pictures
Traders are obviously no strangers to the growing use of tech. At most exchanges trading floors have been replaced by servers, and plenty of hedge funds rely on computer programs to make buy and sell decisions.
But in the next wave, computers will replace humans -who are expensive and prone to error - entirely, and jobs will go to those who can build and control the technology instead. That's the conclusion of a new report from Tabb Group.
Financial market participants currently spend more than three times more money on people than they do on hardware, software and data, according to the report.
The report, written by consulting analyst Paul Rowady, likens the digital transformation to the industrial revolution.
Under the sub-title of 'Human Latency', the report said: "We see the true and blunt objective of digital transformation as the elimination of dependence on human responsibility for tasks and processes wherever possible." Tabb Group
Where humans can't be "eliminated" technology will make them faster at their jobs, Rowady writes.
"Though digitization likely means industry-wide reduction in net headcount, it is also likely to require a shift in the mix of skillsets as well."
For example, specialists in human-computer interface design and user-experience design will be in demand. So will data scientists, which the report dubs as the new "quants."
This is already happening. Goldman Sachs employs more programmers and engineers working on tech matters than Facebook, while JPMorgan chief Jamie Dimon said in his annual letter to shareholders that: "Silicon Valley is coming."
The focus on cheaper and efficient technology comes at a time of depressed returns for the investment banking industry. A combination of increased regulation, low interest rates and reduced volatility has crimped bank's return on equity, a key gauge of returns to shareholders.
The digital transformation will help, according to the report.
"In some ways, this fundamental objective of digital transformation may be interpreted as a dire prognosis for many or most employees since the digital transformation in financial services is essentially about both improving outcomes and lowering costs."
- I spent 2 weeks in India. A highlight was visiting a small mountain town so beautiful it didn't seem real.
- I quit McKinsey after 1.5 years. I was making over $200k but my mental health was shattered.
- Some Tesla factory workers realized they were laid off when security scanned their badges and sent them back on shuttles, sources say
- World Liver Day 2024: 10 Foods that are necessary for a healthy liver
- Essential tips for effortlessly renewing your bike insurance policy in 2024
- Indian Railways to break record with 9,111 trips to meet travel demand this summer, nearly 3,000 more than in 2023
- India's exports to China, UAE, Russia, Singapore rose in 2023-24
- A case for investing in Government securities