Skip to main content

Its not only the assembly line where robots rule!

For years we have been told that many blue collar jobs have disappeared; replaced by the assembly line robot.




Well the financial world is seeing the same thing.



A long long time ago, when I started in finance an order was written by hand (badly) on a ticket -- there was the counterpart, the amount and the price and time of trade.  This was then shipped to middle and back office for confirmation and booking.

For many many years the paper tickets have been replaced (although you still see the occasional dusty time punch...in the trading rooms).  Over the years more and more of the back and middle office functions have been replaced by computers -- reconciliation and confirmation is a lot easier. As I was leaving the capital markets an increasingly large portion of trading (stocks & bonds) was done by machines with little human intervention.  F/X was one of the last bastions and even there products such as Autobahn from DB was showing the future of no human intervention.

Now for a reality check -- how has automation changed Wall Street?  In a nutshell nearly 1/5th of all jobs have disappeared from Wall Street between 2011 and 2016 -- worse affected were commodities over the past 12 months -- which is not surprising, but over the long term its bond desk -32% that have been the most affected (because so much of their work can be automated).

I predict its just going to get worse for Wall Street


  • Trade finance will become the domaine of Fintechs (few legacy costs)
  • Payments (domestic and international) already many new low cost players are emerging both cheaper and faster (new players will often execute an international payment within hours -- as opposed to days/weeks for High street banks)
  • Receivables financing they never liked the business and were rather bad at it
  • Investment banking:  Honestly, so much BS in the prospectus written by junior bankers who know nothing, building models based on WAG assumptions.  If a computer can write fiction -- it should be amazing at writing a prospectus.
  • Research:  Honestly, surprisingly that low value business (honestly when was the last time you read a research report worth the paper it was written on).  Its even easier now since there is almost no proprietary information (excluding hedge funds and they don't share their thoughts with the planet)

Ok these last two are just a dream -- so much of the low level IB work is completely redundant and the same for a large percentage of research...

Still a business that accounts for nearly 7% of America's GDP, and probably a larger percentage of its profits is shedding workers at an unprecedented rate.  These high paying jobs are gone, replaced by algorithms and robots -- the overlords are here...

This may be a good thing for Wall Street; few weeks go buy these days without some other market rigging mega fine payed by some mega banks (which doesn't recognize any guilt, but is just paying billions...'cause they are good guys really).  Machine are less likely to do these things to "improve their bonus pools" because they don't have bonus pools...

Anyway, Wall Street may soon be the only fully automated business in America, long live our robot overlords!


End of rant.




Comments

Post a Comment

Popular posts from this blog

what people get wrong about tariffs

 The issue is simple. What percentage of the economy is dependent on tariff goods? The truth, is that the US economy is far more closed than people understand. People genuinely believe that all manufacturing has ceased to exist in the United States all given to China on the altar of woke policy the truth can be further from That statement. Only about 15% of US GDP is related to foreign trade. Of that amount, slightly more than half is from Canada in Mexico. And half of that is energy. What that means, is that about 7% of US GDP is tariff dependent. The proof in the pudding, is how little money tariff generates. People think that 30 or 50 billion is a lot it’s not in an economy that has $3 trillion. The impact on the US economy will be less visible but not absent. Inflation hasn’t occurred yet first because tests have hardly started to bite, but more importantly it’s such a small percent of the economy. Now certain things are critical. The rare earth metals from China were critical....
Post a Comment
Read more

The end of Tesla?

 it takes a special kind of idiot, to think that he can antagonize his entire customer base, and think that it will not impact his business. When Elon Musk went to work for Donald Trump, and created the doge department, he antagonized every liberal, and these people represent 90% of his client base.That’s not a brilliant move. Now Elon Musk is worth hundreds of billions of dollar, so he shouldn’t care a great deal, however, he needs to care because of several other issues. The cyber truck has been a disaster, most have had to be recalled because of defective glue, it’s not a truck, it’s not a car, it’s noisy, relatively uncomfortable, but great as a development platform. What Tesla has learned in making car manufacturing more seamless is truly amazing. The problem was that Elon Musk was so pissed with the Democrats, and with Joe Biden, in particular because of some slight, which were just plain stupid too. By the way, that he decided to support with hundreds of millions of dollar, ...
Post a Comment
Read more

Trump and Venezuela...

The US now owns Venezuela…and not in a good way.  America is not known for its nation building skills, and yet it now owns the disaster that is Venezuela.   Starvation and exodus are the natural progression.   In addition it will become a haven for narco-terrorists, more so than it already was. I am sure that Trump and his friends really thought that little attack very well…I guess that he will now attack Iran now.  
Post a Comment
Read more