Talk of talent wars, in tech startups, regulation and security concerns, Investment banking, on the whole, has been on the downturn for quite some time now. Some have even come to question whether the field would have a place in the future of finance. Looking at a stat would most certainly clear the air of suspicion, as much as 21% of the front office staff has vacated their chair in the investment banks within the last 5 years. Moreover, there is a fall in the number of U.S brokerage firms by 25% since the year 2000. The following reasons are factoring in the change in the Investment Banking Industry:
Specialization:
Earlier, investment banks used to offer anything under the hood, when it came to money. Be it a fund for education or an investment in high yield, legitimate bonds, you name it and you got it. But now, with the onslaught from Fintech companies from every nook and corner, it is being speculated that sooner or later we will see a collaboration of the investment banking industry and Fintech. Put in a nutshell, the banks have to start showing specialization in one sector or the other.
Technology:
The stock markets were the first to embrace the wave of digitalization. Having said that, artificial intelligence, Big Data, mobile technologies and other interactive platforms are being leveraged by the current generation of investment banking for the purpose of optimization. Multiple trading platforms, reforms in the banking and I.T systems are a few of the things which are in the pipeline for the banks.
Blockchain:
Up until recently almost all the financial transactions, be it the stock market or from one person to another, were regulated through a bank. Now, the technology behind the revolutionary bitcoin is being implemented into investment banking as well. Blockchain, will help reduce the commissions, increment the speed of transactions and last but not the least, upend the security measures to prevent fraudulent transactions. With the right economic and political climate, what is now only being tested with smaller applications, could come to change the way we transact online in the next 10 years.
AI & Automation
Robo-adviser has been duped to eat the human jobs in the foreseeable future even on Wall Street. Guiding financial decisions to completion will be the job of artificial intelligence and automation which will effectively reduce the operating time required currently to answer the age old question, where to put our money?
But what is merely talk right now, will take the time to be implemented in reality. For this reason, investment banking as a whole would first transition to robot-human advisors, wherein people would be sitting right along with their robots, helping them train and learn the attributes of where to invest, spotting trends, avoiding news that is redundant and further analyzing information.
Hence, investment banking industry will see a new generation of traders that would also be adept at programming the robots and be a specialist in asking the AI the right questions, to leverage the best-suited answers.