Believe it or not, global banking giant Goldman Sachs have two equity traders left. That’s down from a high of 600 traders who were employed at Goldman Sach’s New York headquarters in the year 2000, according Marty Chavez, Goldman’s new CFO.
Automated trading programs have been enthusiastically embraced by Goldman Sachs and many other global firms over the last few years which have led computer engineers to become more in demand that equity traders. Although the company originally used trading algorithms and machine-learning technology to conduct easy trades, they are now being used for complicated trading activities like currencies and futures.
But that’s not all. Sophisticated software programs are also helping Goldman Sachs in their mergers and acquisition business where a growing team of programmers has been developing technology to make traditional investment banking more efficient. Programmers are now involved in handling equity underwriting, buyouts and mergers & acquisition deals within the financial services and real estate sectors.
According to Chavez, who will become Goldman’s CFO in April, as many as four traders can be replaced by one engineer. Today, 200 computer engineers currently support Goldman’s two remaining equity traders. One third of Goldman’s entire staff are computer engineers.
In the last decade, the introduction of new technologies has placed significant pressure on banks. According to a Mckinsey global banking review, digitization is part of three major forces that threaten to significantly lower profits for the global banking industry over the next three years. Other major forces include a weak global economy and regulations. Digitization alone is set to wipe out almost two-thirds of earnings on some financial products according to the Mckinsey report.
As the pace of digitization continues to increase, careers in trading and many other finance related professions look to be coming to a slow but definite end.
This article was first published on TheFintechBuzz.