Goldman juniors explain why they won't be replaced by machines

Are junior banking jobs passé? Are the analysts and associates who work 80 hours+ a week in corporate finance due to be replaced by intelligent computers that don't have to leave the office at 9pm on a Friday? Apparently not. Today's juniors are convinced that human beings have the edge, come what may.

"There's an incredibly low risk that the job done by the traditional M&A analyst will be automated," says one analyst in the investment banking division (IBD) at Goldman Sachs. "Almost all the analysis we do is tailored to a particular company and structure of transaction. It means we usually build new models and presentations entirely from scratch. Automation is more likely in areas like risk where processes are standardized."

Another Goldman junior echoes this view. If jobs get automated away at Goldman, he says they're not going to go in M&A and capital markets but in risk and compliance. He says this is where the headcount and cost squeeze is on - not at the lower levels of IBD.

Are the juniors deluding themselves? Earlier this month, Goldman revealed its success at automating the process of putting together an initial public offering (IPO) for clients of its equity capital markets business. Under the guidance of George Lee, a veteran tech banker and CIO to the investment banking division, Goldman has created a product called "Deal Link". This arranges and tracks legal and compliance reviews, fills in forms and generates reports related to the IPO process. All this work was previously done by insomniac 24 year-olds.

Even so, those same 24 year-olds are sanguine about their future with the firm. "Lee has told us that his intention is to elevate our importance in the firm - not do do away with us," says one. "There's still a lot of high value work to go around."

Much as Goldman's cost cutters and technologists might like to replace junior bankers with machine learning algorithms, the bankers we spoke to said there's been push-back from clients and MDs when automation of 'higher level functions' has been attempted. "We've already seen that standardized [pitch book] templates just aren't very popular with clients or senior bankers - they don't address exactly what we want to show and clients can see that their presentation has been recycled," says one.

If anything else's going to be automated in the M&A process, the analysts said it's most likely to be the tedious stuff: the formatting of slides, the writing of meeting notes, the scheduling and the compliance. - Much like the stuff that's been automated by Deal Link in the course of arranging an IPO.

Meanwhile, the analysts we spoke to have fully bought into the notion that they'll get to do more interesting work instead. "In the new world, deals are going to cluster around the banks that are the absolute best," says one. "The banks with the intellectual prestige and the best relationships.

"As a junior you'll spend a lot more time on high value work," she adds. "- It's going to be much more about understanding and analyzing industry trends, trying to get behind nascent subsectors with immense growth potential (eg. athleisure wear, craft beer, healthy eating, AI), or anticipating the macroeconomic and business cycle and its impact on sectors like oil and gas and real estate."

This brave new world has one downside. If the automation of IBD processes forces junior bankers to raise their game, there's a possibility it could also raise their hours: "On a day-to-day basis we'll do more interesting work, but we'll probably end up working the sorts of hours people worked in 2001," concludes the analyst, warily.

Contact: sbutcher@efinancialcareers.com

Photo credit: Robot by Rog01 is licensed under CC BY 2.0.