New technology makes further strides, as Goldman Sachs welcomes automation

Maria Nikolova

“Those 600 traders, there is a lot of space where they used to sit,” says Marty Chavez, Goldman Sachs’ deputy CFO.

Innovative financial technology keeps making further strides and artificial intelligence (AI) systems increasingly threaten to assume more and more positions in the industry.

In January this year, FinanceFeeds reported of IBM’s Watson replacing 34 employees at Japan’s Fukoku Mutual Life Insurance. Just a couple of weeks later, there was the news of Russia’s Sberbank planning to let go 3,000 employees at its legal department because they would be replaced by a robot.

This trend is underlined by a recent report by the MIT Technology Review, referring to the latest steps made by Goldman Sachs with regards to using automated systems instead of human workforce.

Marty Chavez, Goldman Sachs’s deputy chief financial officer and former chief information officer, explains that automated trading programs have assumed the bulk of the work performed by human traders at the company’s US cash equities trading desk in New York. Now there are only 2 equity traders working at this desk, compared to 600 traders in 2000.

Mr Chavez says currency trading and certain parts of investment banking will follow suit.

Goldman Sachs has already started automating currency trading. The findings are dismal for traders – it turns out that four traders can be replaced by one computer engineer, according to Mr Chavez. Currently, approximately a third of Goldman Sachs’s staff are computer engineers.

Mr Chavez forecasts that automation will affect investment banking tasks afterwards. He stresses that cutting the number of investment bankers would result in significant cost savings for the company. The MIT Technology Review refers to data from Coalition showing that investment bankers working on corporate mergers and acquisitions at large banks make on average $700,000 a year, with the sum being higher in a good year.

Earlier this month, FinanceFeeds interviewed the team behind Albert, an artificial intelligence marketing platform developed by Adgorithms. Albert’s CTO Tomer Naveh explained that the AI platform does indeed reduce expenses related to a bloated marketing workforce, that is, it leads to human capital efficiencies. “Instead of having an army of campaign managers, you take the smartest people and convert them into AI supervisors”, he said.

Mr Naveh noted that “in most cases our customers increase their media buying as it becomes more efficient, rather than focus on cutting costs. Now that there’s a direct correlation between ROI and buying, they want to spend more and aren’t as focused on cutting budget”.

Goldman Sachs has a new AI system for consumer lending – it is called (he is called?) Marcus and, according to the MIT Technology Review, is completely run by software, requiring no human intervention.

Read this next

Institutional FX

CLS FX volume continues downward trend in August

Total daily traded volume submitted to CLS for settlement took yet another step back in August.

Digital Assets

Huobi taps AstroPay to facilitate fiat-to-crypto payment in Latin America

Huobi, the world’s sixth-largest crypto exchange by trading volume, has recently partnered with payment solution provider AstroPay to launch local currency account deposits and withdrawals in Latin America.

Digital Assets

Crypto exchange FTX to raise $1 billion at flat valuation of $32 billion

FTX is reportedly in discussions with a clutch of heavyweights from traditional finance to raise up to $1 billion in fresh funding to fuel more deal-making.

Digital Assets

Revolut US launches trading on Avalanche, Solana, and Dogecoin

British fintech and banking firm Revolut has further expanded its cryptocurrency offering in the US with the addition of 29 new tokens.

Digital Assets

Bahrain greenlights eazyPay to launch Binance Pay

The Central Bank of Bahrain has blessed a new partnership inked by Binance with Eazy Financial Services ‘eazyPay’, a local POS and online payment service provider. The greenlight enables EazyPayto to launch Bitcoin and cryptocurrency payments in the region.

Digital Assets

Coinbase approved to offer crypto for Dutch users

Nasdaq-listed crypto exchange operator Coinbase has been handed regulatory approval to operate as a crypto service provider in the Netherlands.

Metaverse Gaming NFT

AC Milan partners with Solana-based NFT football game MonkeyLeague

“Partnering with champions like AC Milan, an absolute iconic Club throughout footballs history, is another testament to what we are building and where we are headed as a game and game studio. It also represents a key step in our plans to bridge the Web2 and Web3 worlds.”

Digital Assets

Shariah-compliant Islamic Coin to support SDG-compliant ventures, green projects, and philanthropy

Shariah-compliant Islamic Coin has recently launched a collaboration with the World Green Growth Organization and the International Youth Conference 6, taking place on September 22-25th and September 30th-October 1st, 2022, in New York. 

Market News

Week ahead: US core PCE and eurozone CPI 

We heard from a range of central banks last week and the update sparked big moves in the markets, and the bulk of the volatility was in currencies.

<