How Wall Street Banks and Investment Firms Are Using AI

Estimated read time 5 min read

Generative AI has had Wall Street abuzz since the introduction of Open AI’s ChatGPT in late 2022.

Business Insider has been reporting on how some of finance’s biggest players are approaching artificial intelligence, from how it might impact jobs to how to use it to cut costs and ramp up efficiencies. It might even be the sector to end the drought in dealmaking.

Experts in the space are in high demand as banks and investment giants race to understand and implement AI. However, there’s a level of trepidation, and most are early in experimenting with different use cases.

Here is what we know about how Wall Street is embracing AI:

Banks accelerated their AI research and use cases due to the rise of ChatGPT

We identified 17 of the top AI executives and technologists to know at the country’s biggest banks.

JPMorgan CEO Jamie Dimon said banks can win the AI battle against fintech in an earnings call this fall. Dimon laid out his vision for how America’s largest bank will win this race through data. Meet the leaders of that mission.

Goldman Sachs’ chief information officer and head of machine learning quants say we are at an inflection point with AI. Large language models, the form of AI behind ChatGPT, could transform how Wall Street does business. Marco Argenti and Dimitris Tsementzis outlined three areas where the bank is experimenting with LLMs.

Deutsche Bank is aggressively experimenting with AI capabilities to transform the bank.

The bank is on a hiring spree, trying to more than double its AI employee base of around 300, but uncertainty around regulation, talent wars, and the cost of scaling the tech won’t make it easy.

For a look into how America’s biggest banks have been thinking about innovating through AI, just take a look at the patents they’ve filed through the years. Data from consultancy Evident shows how banks are using the tech in everything from trading to UX.

Hedge funds have been on an AI hiring tear as firms look to solidify their teams and strategies

Top AI executives at hedge funds are tasked with setting their companies’ AI agendas and ensuring that research and tech development progress is shared across the firm. These execs aren’t always responsible for building the technology. For some, their role is influencing—or advocating for — its use among internal stakeholders, like portfolio managers, business leaders, and fund founders.

Bridgewater plans to launch a fund next July that will be driven by AI. The fund’s AIA Labs is working to replicate every stage of the investment process with machine learning. The firm’s co-chief investment officer and chief scientist outlined the plans of the world’s largest hedge fund.

Balyasny Asset Management is in the midst of building the AI equivalent of a senior analyst. Charlie Flanagan, the head of applied AI at the $21 billion hedge fund, broke down his plan to amass a collection of bots to automate grunt work for analysts.

Man Group, the largest publicly listed hedge fund with $161.2 billion, launched a new data and machine learning group focused on generative AI in October. Tim Mace, who heads the department, outlined new capabilities his team is developing.

Interviews with 11 AI executives, recruiters, vendors, and consultants working on Wall Street lifted the hood on the cultural challenges hedge funds might face as they use their deep pockets to lure in AI talent. These leaders can struggle to gain the trust of business leaders and break into investment teams, and AI researchers have struggled with hedge funds’ penchant for secrecy.

Other asset managers are also trying to figure out how AI can boost their dealmaking and investment skills

As private equity giants place insurance firms at the center of their private-credit businesses, Blackstone is hoping AI will give it a leg up to capture more of the market. Here’s how the firm is giving its insurance clients an edge with revved-up risk management capabilities.

Swedish PE giant EQT built an AI engine called Motherbrain that has changed how its investors source deals. ChatGPT enables the investing giant to take the next step with its AI ambitions.

AllianceBernstein has been building a team focused on AI and data science since 2017.

Andrew Chin, AB’s head of investment solutions and data science, talked to BI about how the asset manager uses AI to get an edge, save analysts hours of work, and improve risk management.

AI could make some jobs less tedious but harder to get at the same time

Insider spoke to five industry experts to get their take on how ChatGPT and its underlying tech could be applied to various sectors of financial services.

AI could improve the lives of investment bankers by taking on some tedious tasks, but it can also make it harder to break into and alter the skills required for entry.

As financial firms’ AI strategies come into focus, they’re hiring more technologists with specialized skills. For those who want to land an AI job on Wall Street, here’s everything you need to know about how tech skills and roles are changing.