As the NFT boom fades away, the crypto industry is witnessing a surge of interest in artificial intelligence. Many individuals who were once enthusiastic about NFTs are now pivoting to AI, exploring new opportunities in this cutting-edge technology. The integration of AI into investment banking is gaining momentum, and Sean Manahan, the Global Head of Technology Business Development at Morgan Stanley, is at the forefront of this transformation.
Morgan Stanley’s AI journey
Sean Manahan’s role at Morgan Stanley bridges the gap between Silicon Valley’s innovation and Wall Street’s practicality. Having been acquainted with OpenAI when they were still a nonprofit research team, Manahan deeply understands the potential AI holds for financial institutions. One of the upcoming AI tools at Morgan Stanley is helping wealth managers navigate the bank’s vast repository of research and data. While this technology is promising, some may wonder if it can do more than generate personalized limericks, a skill that wealth managers may not find particularly useful.
AI technology assessment at Morgan Stanley
Manahan’s team, comprising 30 members, assesses tech vendors that can add value to Morgan Stanley’s operations. Unlike typical purchasing managers, this team engages with various business units to comprehend their needs and pain points. Additionally, they actively collaborate with venture capitalists and tech bankers to identify promising startups before their competitors. However, working with startups in a heavily regulated industry poses its challenges, as not all of them may have the capability or maturity to meet compliance standards.
Expanding career paths, from medicine to banking
Beyond AI’s impact, there is an interesting trend in career paths, with some medical doctors exploring opportunities in investment banking and related fields. Although medical doctors traditionally worked in biotech or healthcare coverage, a new startup website encourages junior doctors to consider banking and management consultancy roles. The rationale behind this trend is to leverage skills such as endurance, meticulous record-keeping, and handling anxious and irate individuals in non-medical roles.
Banking as an alternative for junior doctors
While some may view this as a waste of medical talent, others argue that it gives junior doctors a more prestigious and better-paying option to pay off their medical school debt. However, this shift could limit the pool of talent entering investment banking, which has typically attracted some of the brightest and most dedicated individuals.
As the financial industry evolves, businesses are exploring new ways to incentivize their staff, with an increasing emphasis on tips and bonuses. Additionally, banks increasingly rely on hedge funds, particularly a select few pod shops. This raises questions about the sustainability of this concentration and the future of absolute return investments in the low-interest rate environment.
Goldman Sachs’ adaptation strategy
In response to changing market dynamics, Goldman Sachs is diversifying its investment strategies. Observing that regional US banks are scaling back lending, Goldman Sachs Asset Management is venturing into private credit to capitalize on this industry shift.
Andreea Koening, a former investment banker at Goldman Sachs and JPMorgan, is now a director at a French football club. Her experience in a male-dominated field prepared her well for the challenges she faces in her current role.
Cost-cutting and lawsuits
CME Group is reducing its global workforce by 3%, resulting in more than $1 billion in severance payments. Additionally, shareholder lawsuits against banks are rising, while SPAC-related lawsuits are declining.
The growing role of AI in investment banking offers exciting opportunities for innovation and efficiency. As banks explore the potential of this technology, they must balance the Silicon Valley spirit of innovation with Wall Street’s regulatory constraints to achieve success.
The integration of AI and the diversification of talent pools in investment banking are transforming the industry. As banks embrace new technologies and career paths, the future of finance promises to be both innovative and adaptive.
