(Editor's note: This story was first published on June 27. It was updated on July 15 to include comments Goldman's CEO, David Solomon, made during an earnings call.)
A big question across Wall Street has been the impact the next generation of artificial intelligence will have on the investment-banking workforce. For Goldman Sachs' investment bankers, the answer may be just over the horizon.
Top Goldman executives told Business Insider that the investment bank was poised to roll out a series of generative-AI tools to its workforce as soon as next year.
"I am hopeful that 2025 is a year in which a lot of these technologies really land at scale on desks, begin to influence our workflows, begin to help us create new competitive advantages," George Lee, a partner and cohead of the Goldman Sachs Global Institute, told BI in June.
On Monday, Goldman CEO David Solomon expounded on the firm's AI plans, saying the company's board of directors recently returned from a week in Silicon Valley where they spoke with "the CEOs of many of the leading institutions at the cutting edge of technology and AI."
"We all left with a sense of optimism about the application of AI tools and the accelerating innovation in technology more broadly," Solomon said in a call to discuss second-quarter earnings. The bank's board, he said, is thrilled about the productivity gains AI will generate for the bank and the business it will bring as clients look to raise money to build AI tools or make acquisitions.
"The thing we are most excited about is all the business we are looking at," he said. Companies "will need to make investments, will need financing, need to scale," he added."
AI will take over some jobs
The focus on AI's impact on the banking industry comes as companies, big and small, race to determine how their workforces will coexist with one of the most transformative new technologies of the century.
In the context of investment banking — an industry that largely functions through the analog art of dispensing financial advice and leaning on connections — it remains to be seen how AI could upend bankers' workflows. To be sure, AI solutions could prove a boon to getting work done faster and alleviating the monotony of some aspects of the job, but it's also expected to result in fewer entry-level roles since some of the tasks typically delegated to junior bankers could be tackled by machines.
"It may reduce certain job categories or roles, but it may create others as well," JPMorgan CEO Jamie Dimon wrote in a letter to shareholders this spring. "As we have in the past, we will aggressively retrain and redeploy our talent to make sure we are taking care of our employees if they are affected by this trend."
"There probably will be some level of task substitution, probably some level of job substitution," Lee said. "But — consistent with other waves like this — new functions, new roles, new jobs will emerge."
To help Goldman's engineers and product specialists liaise about new AI-driven concepts and deliver feedback, Lee said that the bank had set up "several forums" and was evaluating ways that AI could help speed up client-oriented tasks.
"It's going to elevate the creativity and creative problem-solving that our bankers bring to clients," said Lee, who previously sat on the firm's high-level management committee and served as the chief information officer and a cohead of the investment bank's global technology, media, and telecommunications business.
Senior bankers will reap the benefits
During Monday's conference call, Solomon said the bank is eyeing productivity gains across its businesses, from investment banking to tech. On investment banking, he said he sees AI aiding in what he called "the factory of the business," to prepare information for clients.
He also sees AI helping the bank get "data and information to clients so that they can make better decisions around the way they position the markets. He also sees it aiding the bank's close to 11,000 engineers by boosting their coding productivity.
Spending in the space has skyrocketed, with Goldman's own researchers forecasting that AI investments will approach about $200 billion globally by next year.
Alison Mass, Goldman's chair of investment banking, said the topic was still "very, very early" and that "the real productivity gains will be over time."
While AI could benefit people at all ends of the banking spectrum, she said bankers with a lot of experience would be best protected from some of the more unpleasant consequences, like job cuts.
"Generative AI will have very little impact on the M&A banker because of the judgment and advice needed," Mass said in an interview with BI. "AI is not going to replace Tim Ingrassia or Gene Sykes," she added, referencing two of the firm's star dealmakers who serve as cochairs of global mergers and acquisitions.
Still, some watchers have pontificated that Wall Street firms could shed members of their junior-banker classes as they increasingly embrace automation. "In the near term, we anticipate no changes to our incoming analyst classes," a Goldman spokesperson told The New York Times this spring about the ramifications for entry-level financiers. (The spokesperson confirmed to BI that as of June, this remained the bank's latest thinking.)
It could improve work for the youngest recruits
Even though it could replace some juniors' jobs, AI also holds the promise of making the most onerous parts of the position easier for those who survive.
Deutsche Bank, for instance, is testing ways to reduce the time some junior bankers spend on tedious tasks from days to seconds, as BI has previously reported. At Goldman, the bank has been exploring how AI could streamline the creation of pitch books or automate company comparison tables.
Many junior bankers spend time on tasks that can sometimes feel "relatively routine," Lee said, adding: "If we can abstract away some of that work and then take more advantage of their creativity, their intuition, their cognitive skills, etc., I think that will both make the job better for them and hopefully bring even more creativity and ideation to client dialogue."
People like Ingrassia agree that a banker's best asset — their judgment — will help insulate them from the dangers AI could pose for the financial-services workforce. After all, AI doesn't yet know how to substitute the thinking of a well-trained, deal-hardened investment banker.
"Clients don't mandate us for spreadsheets or raw data analysis," Ingrassia said. "Clients choose Goldman for the interpretation of the analysis we provide aided by our long track record of unparalleled strategic advice."
The rise of artificial intelligence "is going to be a change the industry needs to confront," Ingrassia added, but the firm feels confident in its preparedness: "We are very focused on it and think we will be poised to further increase our productivity."
Business Insider has reported extensively on the ways Wall Street is interacting with AI, from the opportunities to the threats. Here's a look at some of our recent coverage.
- Everything we know about how finance giants are adopting AI, from Goldman Sachs to Blackstone
- Goldman Sachs CEO David Solomon breaks down how the AI obsession is creating a gold rush for the bank
- Here's how the 6 biggest US banks are thinking about AI and the 17 executives leading the strategy
- Jamie Dimon says he's out to win the AI arms race. See who he's put in charge of this critical mission.
- JPMorgan is making a big bet on AI. Here's how its private bankers are using it.
- Inside Goldman Sachs' plans for AI, from helping non-tech workers do more with software to streamlining how code is documented
- How AI will change the job of the junior banker and raise the bar to entry
- Meet Neema Raphael, the data whiz key to Goldman's AI ambitions who's overseeing the bank's army of engineers and scientists
- More than half of banking jobs could be automated by AI — but banks will be slow to adopt, Citi report says
- AI is coming for Wall Street: Banks are reportedly weighing cutting analyst hiring by two-thirds
Do you work on Wall Street or in artificial intelligence? Contact this reporter. Reed Alexander can be reached via SMS or the encrypted app Signal at 561-247-5758, or via email at ralexander@bjinnox.com.
