Artificial Intelligence: Why Wall Street Jobs Are Vulnerable to AI

December 13, 2019 | Artificial Intelligence, News

A Wells Fargo report said robots would take away 200,000 banking jobs in the next decade. What about trading and advisory jobs on Wall Street?

The House Financial Services Committee’s Task Force on Artificial Intelligence met last week to consider the impact of AI on Wall Street jobs, according to Forbes. The jobs under the lens were trading, robo-advisory, market surveillance and other functions in the financial services sector.

Wall Street jobs: AI lays off traders

Cornell University professor López de Prado said in his testimony that computer algorithms had already displaced thousands of traders from their jobs. This trend accelerated after the advent of electronic markets. The New York Stock Exchange floor, once abuzz with human traders, is now empty and runs on electronic technology.

Moreover, for traders, it’s not trading skills that matter. In the new age world, they must have capabilities in maths, technology, software, coding, data analytics, and other skills to be able to embrace electronic trading. So, the doors are open to Ivy League PhDs who can write codes.

According to Prado, worse is to come. The 6.14 million people employed in finance and insurance are under threat from financial machine learning. “Many of them will lose their jobs – not necessarily because the machines will replace them, but because they are not trained to work alongside algorithms,” he said.

Wall Street jobs: AI does compliance better

Electronic trading has spawned a new, sophisticated and high-tech bad actor. Market abuse by these highly skilled manipulators and operators is getting difficult to spot by humans. For effective surveillance, exchanges must now be technologically proficient and have access to automated systems as well as AI.

Surveillance professionals can no longer do it alone. NASDAQ has had to deploy over 40 algorithms that use 35,000 parameters to pinpoint market abuse and manipulation in real-time.

It is inevitable that in future tech (read: AI) will substantially take over surveillance of trading activities.

All is not doom and gloom, however

In her testimony to the House, Rebecca Fender, Senior Director, Future of Finance at CFA Institute, addressed the future of the investment professional among jobs in Wall Street.

“We believe in the power of the “AI + HI” model—that is, most tasks are and will remain best handled using both AI and human intelligence, and the collective power of the two is superior to either element on its own,” she said.

Further, “It is not a race between humans and machines. The competition ultimately is among “AI + HI” teams.”

[Related Story: Artificial Intelligence: Banks Can Leverage AI For a $450 Billion Bonanza ]

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