The guys on Wall Street were happy enough when robots were only replacing the people who cut their Brooks Brothers suits and creating custom platinum cases for their phones. That was called optimizing profit. But now, automation is coming for them.
Are the humans of finance an endangered species? ...
Squeezed by low interest rates, shrinking trading revenue, and nimbler technology-based competitors, banks are racing to remake themselves as digital companies to cut costs and better serve clients. In other words, they’re preparing for the day that machines made by men and women take over more of what used to be the sole province of humans: knowledge work. Call it self-disruption.
Wall Street already had a high degree of automation. It had to. Modern trading takes place in milliseconds, and billions of dollars depend on who has the fastest connection, the quickest calculations, and the best algorithms for predicting just the right moment to buy or sell. But traders still like to get their slow carbon-based fingers into the game. How else to justify that next Ferrari-sized bonus? Now the kill-all-humans attitude is extending into the rest of the financial game.
In February, State Street executives told analysts that after spending five years upgrading technology systems, they realized how much more could be done. “We have 20,000 manual interventions on trades every day,” said Michael Rogers, president of the Boston bank. “There’s a huge opportunity to digitize that and move it forward electronically.”
One thing that hasn’t changed on Wall Street? “Huge opportunity” means “get rid of a lot of people.” More than 6,000 of them, in this case.
At first it may be tempting to see this as fat cats finally being on the receiving end of some of the misery they’ve been doling out—chickens, meet roost, etc. However, the end result of this is to make the concentration of wealth even more concentrated.
The 0.1 percent are becoming the 0.001 percent. And that’s only the start.
Bank executives know what’s coming. So they’re setting up coder labs and investing in startups, teaming up with digital competitors or buying them outright. JPMorgan Chase, the biggest U.S. lender by assets, is using AI to identify potential equity clients. And it’s marshaling OnDeck Capital’s client-vetting algorithm to speed lending to small businesses. Both Bank of America and Morgan Stanley, which together employ more than 32,000 human financial advisers, are developing automated robo-advisers.
Some people get to train their own replacement. Others get to build it.
Either way, this kind of work is actually far easier to turn into code than a lot of industrial processes that require complex movement, vision, and touch. But honestly, it’s hard to think of any occupation, no matter how dependent on insight or creativity, which is immune to being consumed by automation. And soon.
It may be too much to ask the masters of capitalism to notice that capitalism can’t work in a society where a handful of people control not just all the wealth, but the means of generating wealth. That doesn’t mean they won’t have to live with it. So will the rest of us.