By Olivia Oran
NEW YORK (Reuters) - Technology whizzes who helped Goldman Sachs (GS.N) eliminate hundreds of trading jobs over the past few years are venturing into the bank's flagship M&A business, making some junior bankers uneasy.
A team of 75 programmers, internally referred to as "strats," has been developing technology to make Goldman's elite dealmakers more productive. That team within investment banking has doubled in size since 2014, when long time tech banker George Lee was appointed chief information officer for the investment banking division.
Programmers are now supporting those handling equity underwriting, leveraged buyouts and deals within the financial services and real estate sectors. They are also analyzing client data to offer better advice on deal targets and types of actions that might please a particular company’s investor base.
Conventional wisdom holds that investment banking does not yield itself to automation the way trading does, because it relies so much on personal relationships forged over years of business lunches, rounds of golf and boardroom presentations.
Goldman executives say technology aims to reduce the grunt-work junior bankers now perform, so they can spend more time helping top dealmakers rake in more money.
But some who joined Goldman in recent years expecting to advance from supporting cast to lead roles on big deals are wondering whether technology will be their friend or foe.
One employee who asked not to be named told Reuters investment bank staff are looking at how trading got automated, and wondering if the same fate awaits them.
There is more water-cooler chatter among young employees about using their Goldman experience to build a career outside banking, he said. Automation is not the only concern, but it does come up, he added.
"Banking used to be an area where the top undergrads and MBAs wanted jobs, but now so much of those roles are automatable," said Tom Davenport, a professor of information technology and management at Babson College.
MIT AND WHARTON
One concern is that technology may make some staff redundant. Another is that the strats themselves – more likely to hold engineering PhDs from the Massachusetts Institute of Technology than MBAs from Wharton – could get ahead of bankers on a career path.
Worries have been exacerbated by weak business and broader job cuts across the industry.
At Goldman, revenue fell 9 percent last year to its lowest since 2011, and its return on equity remains below the 10 percent investors generally expect. Investment banking had a rough year, hurt by a near-empty calendar for initial public offerings, and a broad slowdown in M&A activity.