How Investment Banks, Hedge Funds, and Investment Firms Are Using AI | Invesloan.com

Welcome to Wall Street’s AI era.

Banks, hedge funds, asset managers, and private equity firms have been eager to use generative AI to boost productivity and reduce grunt work for workers. Since OpenAI’s introduction of ChatGPT, finance firms have moved from pockets of experimentation to scaling these generative AI tools companywide. Such tech advancements have been met with a mix of enthusiasm and cynicism.

Business Insider has been reporting on how some of finance’s biggest players are approaching artificial intelligence, from how it might impact jobs and create new ones, to the different ways firms are cutting costs and ramping up efficiencies.

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 is a “tremendous” user of the bank’s generative AI suite. We have the story of how he and other execs use AI at the bank. Dimon also laid out his vision for how America’s largest bank will win the AI battle against fintechs through data. Meet the leaders of that mission.

Goldman Sachs’ chief information officer, Marco Argenti, and head of machine learning quants, Dimitris Tsementzis, say we are at an inflection point with AI. The technology is already changing how employees at the Wall Street giant does business. CEO David Solomon has said AI is changing processes like drafting IPO filings and analyst research. Seven Goldman employees from across the bank shared how they use AI on a daily basis. Meanwhile, Chief Data Officer Neema Raphael also outlined the bank’s latest generative AI tool, taking aim at enterprise search.

Morgan Stanley, which partners with OpenAI, promoted wealth tech executive Jeff McMillan to become the bank’s first head of firm-wide artificial intelligence in March. He explained how the wealth management arm has been using its new chatbot and hinted at what’s next for the firm. McMillan has also outlined his strategy to turn employees’ AI ideas into reality. Meanwhile, Morgan Stanley’s new innovation head told BI how he is looking to replicate the success of the bank’s OpenAI partnership with more technology tie-ups.

At Citibank, generative AI is poised to change just about every employee’s job. Citi’s wealth business, for one, is about to welcome an AI leader from rival Morgan Stanley.

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.

Generative AI could be one of the most promising tech advancements on Wall Street — it may also turn out to be one of the most threatening. Four in five bank leaders surveyed by Accenture in a recent study said they feel like they can’t protect against hackers armed with AI.

Take a look at the patents filed by America’s biggest banks over the years to see how they’ve been thinking about innovating through AI. Data from consultancy Evident revealed how banks are using the tech in everything from trading to UX.

AI is entering the deal room. Investment bankers at nine top firms predict that AI will trigger a wave of M&A and IPOs. Here are 11 bankers poised to lead the AI revolution for Wall Street. Some of those bankers predict the deals that could drive the “AI arms race” in 2025.

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.

Point72’s CTO Ilya Gaysinskiy knows that his boss, billionaire and New York Mets owner Steve Cohen, likes to win. In his first interview since joining the hedge fund last September, Gaysinskiy told BI about his big plans to ramp up Point72’s tech organization and how AI is going to play into that expansion.

Bridgewater launched a fund in July driven by AI. The fund’s AIA Labs worked 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.

D.E. Shaw managing director Neil Katz gave BI an inside look at the quant hedge fund’s generative AI approach, which is built on three main capabilities.

Man Group, the largest publicly listed hedge fund with $161.2 billion in assets under management, 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 revealed 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.

Private equity firms are trying to figure out how AI can boost their dealmaking and investment skills

Wall Street is no stranger to managing and analyzing copious amounts of data — but data is only helpful if you can find it. Here’s an inside look at Blackstone’s approach to enterprise search: DocAI, a generative AI tool that aims to help workers search and summarize more efficiently.

Blackstone is also hoping AI will give it a leg up to capture more of the insurance company 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.

As private equity firms turn to AI for a competitive edge, Thomas H. Lee says its engineers are up to 30% more productive with help from AI coding assistants.

Asset managers are also getting in on the AI action.

The multi-billion investment manager VanEck invested in a Toronto-based startup and is onboarding its technology to boost its ETF business. An exec and the fintech’s CEO walked us through how AI will change analysts’ and salespeople’s jobs.

Asset manager 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.

Fintechs are developing AI tools to help their engineers work faster and smarter.

When the crypto exchange Kraken announced its plans to acquire a retail trading startup for $1.5 billion, the news made headlines. What went under the radar, however, was Kraken’s use of generative AI for the due diligence process of its acquisition target. Here’s how it went, and why the head of Kraken’s M&A business now sees AI as a part of his core team.

Block, billionaire Jack Dorsey’s company behind Square, Afterpay, and Cash App, developed an AI agent that’s an expert coder — it can even write code better and faster than some of the company’s top engineers.

Here’s a look inside the initiative and why Block decided to open-source it.

In 2023, the neobank Chime built its own private version of ChatGPT to help its engineers launch new products and features faster and more cheaply. The fintech’s CTO walked us through his playbook.

AI is shaking up the tech talent market on Wall Street, from creating new jobs to changing what it takes to be a coder.

The proliferation of AI in the finance industry’s tech ranks — both as builders and users — is evolving the role of developers as it becomes increasingly common to delegate much of their coding work to machines. Five industry veterans, including from Goldman Sachs, Point72, and Morgan Stanley, offered advice on how software engineers can keep their edge.

Wall Streeters, say hello to your new coworker. AI agents are beginning to permeate the labor force as assistants who can help humans with everyday tasks. Here’s how banks and startups want to give every employee their own personalized direct report.

Banks, hedge funds, and private equity firms are switching into hiring gear thanks, in part, to a seemingly insatiable demand for AI. Five recruiters outline the most in-demand tech roles on Wall Street

AI is creating entirely new jobs on Wall Street. Here’s one, which has some private equity firms shelling out pay packages of up to $2 million to drum up AI at portfolio companies.

For a broader view at salaries, BI collected salary data on 8 Wall Street banks for AI roles across all levels.

Data is king for hedge funds, and Wall Street’s generative AI era offers new advantages. Here’s how much the biggest proprietary trading firms and hedge funds are willing to pay for talent, according to government data.

Top tech execs from Citadel, Goldman Sachs, and AllianceBernstein open up about how AI is changing the role of the CTO on Wall Street.

Blackstone recently hired an AI exec from Walmart to apply the technology at its some 230 portfolio companies.

AI is redefining what it takes to be a software engineer on Wall Street. Top tech execs from Goldman Sachs and Citi open up about why they want their developers to have liberal arts degrees.

Balyasny’s Bridger program, designed for incoming sell-side analysts to learn coding and AI skills, highlights the evolving skills of an analyst in the age of AI.

Business 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.

AI has opened up a whole new playing field for public cloud giants to compete for Wall Street’s wallet share.

Generative AI has become a key part of Amazon Web Services’s playbook for winning more of Wall Street. The head of the financial services market development walked us through how Amazon’s cloud division is working with JPMorgan, Bridgewater, MUFG, and Rocket Mortgage.

Quant hedge funds are beginning to rely on the latest AI chips, like Nvidia’s popular GPUs, to test some of their most advanced models. Google Cloud is helping quantitative investment firms like Two Sigma and Hudson River Trading innovate around a shortage of sought-after Nvidia AI chips.

Startups are looking to capitalize on Wall Street’s AI fever

Auquan only launched less than two years ago, but it’s already been signed by some big financial firms. Here’s a look at how its technology is automating research work usually done by analysts.

This startup wants to transform how investors and traders analyze data with generative AI. And it’s catching the attention, and dollars, of some of the biggest names in the hedge fund world, like Millennium Management’s founder Izzy Englander and billionaire investor Stanley Druckenmiller.

Meet Mako AI, a generative AI bot designed to solve the woes of early-career private equity associates. The startup, which launched in September, is cofounded by a former Bain and Co. consultant who worked in the PE industry and remembers the countless hours he spent on mundane tasks like collecting data, writing reports, and building formulas.

Wall Street firms know the pains of having to satisfy regulators, but advancements in AI are introducing a whole new level of scrutiny and complexity. Meet this startup, which automates some of the most time-intensive parts of the risk management process.

Louisa AI is a startup built to suggest potential deals for investment bankers and venture capital investors. The fintech, which was born inside Goldman Sachs by a former Goldman managing director, has suggested $800 million in deal values per quarter across a handful of clients.

Wall Street has a reputation for a hard-charging work culture, something that every junior banker learns in their life. Gabe Stengel was one such banker, sometimes staying up until 5 a.m. to create earnings summaries or to pull together presentations for superiors while at Lazard. Stengel knew there had to be a better way.