The strategy has four parts, according to the presentation. The investment bank wants to:
Offer a digital client experience
Build scalable infrastructure
Make room for innovation
To do so, Goldman Sachs is using 45% of its $4 billion engineering budget in 2019 on investment. The other 55% will be used to run the bank.
In the financial services sector, banks are making huge investments in technology. JPMorgan allocated $10.8 billion last year and has earmarked $11.4 billion for technology in 2019. Bank of America spent $10 billion on tech in 2018.
Today, nearly 45 percent of trading is done electronically, according to Coalition, a U.K. firm that tracks the industry.
Average compensation for staff in sales, trading, and research at the 12 largest global investment banks, of which Goldman is one, is $500,000 in salary and bonus, according to Coalition. Seventy-five percent of Wall Street compensation goes to these highly paid “front end” employees, says Amrit Shahani, head of research at Coalition… Investment bankers working on corporate mergers and acquisitions at large banks like Goldman make on average $700,000 a year, according to Coalition, and in a good year they can earn far more.
Automating those $700,000+ meat-sacks:
Goldman Sachs has already begun to automate currency trading, and has found consistently that four traders can be replaced by one computer engineer, Chavez said at the Harvard conference. Some 9,000 people, about one-third of Goldman’s staff, are computer engineers.
Finding the things to automate:
Though those “rainmakers” won’t be replaced entirely, Goldman has already mapped 146 distinct steps taken in any initial public offering of stock, and many are “begging to be automated,” he said.
To be all double-turns-out about the grim automation stuff, in theory, this could mean hiring more programmers and people who support those robots, bringing down those big chunks of cash from “rainmakers” and spreading it down to “lower” grade staff. Of, you know, the bank can just keep that money and trickle it up to execs and share-holders.