Thursday, April 18, 2024

by Tom Snee

While artificial intelligence will change investment banking and finance, a Tippie College of Business expert doesn’t expect to see significant changes in hiring for junior bankers right away. 

“There will be changes in the long-term but the exact timeline of those changes isn’t clear to me,” said Brian Richman, a former Wall Street investment banker who now directs the college’s Hawkinson Institute of Business Finance, which educates students for careers in the field. “I don’t think we’ll see a 75% reduction in analyst hiring in the next two years or anything like that.”

The Hawkinson Institute prepares high-potential Tippie students for demanding, high-profile roles in investment banking, which often lead to careers in private equity, hedge funds, venture investing, and asset management, while some pursue corporate finance and strategy roles. Richman works closely with firms to place Hawkinson students in internships with institutions in New York, Chicago, and other financial centers. Those interns are usually hired for full-time entry-level analyst jobs with the same employer after they graduate. Hawkinson students are chosen competitively, and Richman expects more than 30 students to join next year.

He said his experience in investment banking suggests that Wall Street will need to move deliberately as it adopts AI because of regulatory compliance and confidentiality issues. The technology can help immediately with some of the more mundane tasks that entry-level analysts have to perform, such as building PowerPoint slides or gathering data on companies, so there might be some room to modestly reduce hiring there. But he said banks will have to be careful adopting the technology so as not to run afoul of securities laws.

“If you’re working on a multi-billion dollar acquisition, you can’t use ChatGPT to put together an analysis of comparable companies without possibly exposing data that could give rise to insider trading violations or compromise confidential client information,” he said. 

He expects Wall Street will ultimately develop some proprietary technologies, but he noted that it will take time and that firms have had mixed results with technology investments over the years. While they’ve spent billions of dollars developing new technology, the investments don’t always pay off. 

While he doesn’t see much change in the short term, he expects to see more pronounced changes to hiring after a few years once banks have had a chance to figure out how to best use AI and to work with regulators to develop new rules to accommodate it. 

Media contact: Tom Snee, 319-384-0010 (o); 319-541-8434 (c);