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Morning Coffee: The over-hyped banking jobs you may not want after all. Blankfein talks Brexit

So you thought you wanted to work in artificial intelligence (AI) in the financial services industry and get in at the start of the machine learning revolution? Well...

Much has been spoken about the potential for machine learning to revolutionize the way banks operate. Witness ex-Citigroup CEO Vikram Pandit, who predicted that 30% of banking jobs could be wiped out by AI in five years, or Mizuho Financial Group in Japan, which says it will use AI to replace 19,000 people – a third of its workforce – by 2027, or Sergio Ermotti's suggestion that AI will cut jobs in banks by 30%. If this is a wave, you surely want to be on top of it.

Except, AI isn't yet what you might expect. After surveying major banks on their AI use, the Financial Times notes that most of the really revolutionary AI initiatives will require cognitive AI systems, but these are years away. For the moment, AI is much more perceptual and therefore limited.

Instead of an AI revolution, therefore, the reality is currently much more piecemeal. J.P. Morgan is using AI algorithms to execute trades, Citi is tapping machine learning to handle pricing requests sent to traders, Morgan Stanley has an AI fraud detection team and HSBC will begin using AI to detect money laundering, fraud and terrorist funding. Banks are working on chatbots and voice bots that interact with customers and solve problems before any human staff get involved. They're also working on AI for scanning and parsing documents, as well as some legal, regulatory compliance and risk management procedures.

However, progress is slow and AI jobs in banks are patchy. Banks' budgets vary from below $3m to $50m-plus. One bank says it has 500-800 people working on AI. Another (Nordea, which is seen as particularly technologically advanced), has 25. AI is coming, but its arrival may be more of a blur than a bang. And bank executives seem to have become carried away when contemplating AI's potential to erase jobs done by humans: in private, 75% of the FT's respondents said AI is likely to erase 20% of jobs or less.

Separately, there were about 10% fewer European bankers and fund managers who earned more than €1m ($1.42m) a year in 2016, the year when the U.K. voted to leave the European Union – not because of mass layoffs, but as a result of the falling pound, which lowered the value of their payouts, according to the Wall Street Journal. To add insult to injury, now they might have to move out of the U.K.

Goldman Sachs, which employs around 6k in the City of London, will use both Frankfurt and Paris for its E.U. operations after Brexit. The bank has already told some staff that they’ll be relocated and leased extra office space in Frankfurt. “In the absence of Brexit, we probably would distribute ourselves more, as we have done in the U.S., but Brexit will require more distribution of ourselves into more places than we otherwise would have,” CEO Lloyd Blankfein said.

He indicated that he wouldn’t have decided to build a huge new London office building had he known that the U.K. would be leaving the E.U., according to Financial News. Blankfein said that Frankfurt and Paris may not yet have the infrastructure or regulatory community in place to handle three or four globally-significant banks like Goldman arriving at once, so it is moving London-based investment bankers to other European cities such as Milan, Stockholm and Madrid. In addition, Goldman is looking to hire 60-plus people for its Marquee tech team.


J.P. Morgan has to cough up $500m of Madoff money. (Bloomberg)

Big-name banks are racing to disentangle themselves following the latest wave of U.S. sanctions on Russian oligarchs. (WSJ)

Troels Oerting, Barclays’s former head of information security, was fired after he was found to have billed personal expenses to the company. (Bloomberg)

Credit Suisse CEO Tidjane Thiam, an Arsenal fan, made an analogy criticizing the team’s manager Arsene Wenger when asked about the global economy. (Business Insider)

Under new leadership, Deutsche Bank may tap the brakes on its global ambitions and focus on its home market. (Bloomberg)

A surge in Libor 10 years ago was a harbinger of a crisis that nearly broke the U.S. banking system, but a similar jump this year will probably add billions to the banks’ bottom line. (Bloomberg)

Man Group reported net inflows of $4.8bn in the first quarter and its assets under management rose 3.3% to $112.7bn, but the performance of its funds had negative investment movement of $1.8bn. (FT)

Steve Cohen's right-hand man spoke about Point72 Venture's latest $8m investment, tech on Wall Street and cryptocurrency. (Business Insider)

Despite the struggles of many star hedge fund managers, the industry as a whole is doing fine. (Bloomberg)

Some residents of Abington, Pennsylvania, complained to the school board about an agreement putting the name of Blackstone Group co-founder Steve Schwarzman on the high school, one of the strings attached to his $25m donation, so the billionaire agreed to have a science-and-tech center named after him instead. (Bloomberg)

Gili Raanan, general partner at Sequoia Capital Israel, has raised $50m for a new venture-capital fund, Cyberstarts. (Reuters)

A waiter posing as a bank chief tried to blackmail a £125m hedge fund manager into paying for a £15k nose job – the victim had allegedly headbutted Alexander Khlaf, 20, during an argument over a game of pool at a nightclub. (The Sun)

These are some of the top traders, investors and technologists at the intersection of cryptocurrencies and Wall Street. (Business Insider)

Photo credit: YakobchukOlena/GettyImages

AUTHORDan Butcher US Editor

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