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Financial Technology Retrospective 2023: It's not just AI (but it mostly is)

2023 has been a big year for technology in finance. Some investment banks are going all-in on their tech side projects as others pull back. Engineers face a hiring crisis amidst horrific hiring conditions. Credit Suisse and UBS' merger led to a lot of technologists finding work elsewhere. However, there's one topic everyone can't s̶h̶u̶t̶ u̶p̶ a̶b̶o̶u̶t̶  get enough of...

AI in Finance: A Brave New(ish) World

Artificial intelligence might be in the public consciousness now more than ever, but the financial industry has been on the hype train for decades. That doesn't mean the generative AI boom hasn't shaken things up.

Evident Insights' AI Outcomes report maps out 102 families of AI use case, with the potential for hundreds more within the families. Examples of these families are aggregation algorithms in the back office, low-code systems in the middle office and cash-flow forecasting in the front office. 

Banks are at the forefront of finding AI use cases. HSBC says it has nearly 1000 cases in use or in testing, while BNP Paribas has identified 100 use cases leveraging generative AI (GenAI). Jehangir Byramji, senior innovation lead at Lloyds Banking Group, calls finance the new "vanguard" of AI research.

When it comes to hedge funds and trading firms, banks see GenAI as a productivity booster at best. Two Sigma founder David Siegel says it isn't the "holy grail" of market predictors people want it to be, while Jane Street's Richard Eisenberg calls it "strikingly fallible" when it comes to writing code autonomously. Barry Fitzgerald, co-head of front office tech at Man Group, says its ability to "squeeze more juice" out of processes is "100% worth it."

Credit Suisse's Great Dismantling

One of the most common trends in banking tech teams this year is the decommissioning of unwanted legacy applications. The likes of JPMorgan and Deutsche Bank and JPMorgan have been dismantling their apps in the hundreds, but when it comes to Credit Suisse, 90% of its tech stack is surplus to requirements.

This, of course, is driven by UBS' acquisition of the bank in June. Credit Suisse's tech, including the Crossfinder trading system, was quite highly regarded, but that hasn't stopped UBS putting its own systems front and center. Credit Suisse technologists have been leaving in droves; the most high profile departure was CTOO Joanne Hannaford, the bank's marquee hire of 2021. The ex-Goldman Sachs partner has since joined Deutsche Bank as chief information officer.

While we don't know who was forced out and who left of their own accord, we know that many Credit Suisse technologists have a low opinion of UBS' tech culture. UBS has been doubling down on agile methodology in the last few years, putting it at odds with most other banking tech teams.

JPMorgan and Citi: 2023's Big Hirers

Banks may be touting their continued investments in technology, but more often than not human capital is not a priority. Tech cuts have been rampant throughout the year and even now, before the bell tolls on 2023, Barclays and Santander have gotten in on the action.

There are exceptions, however. JPMorgan is the most notable. Its $12bn cash injection into tech functions is well underway and, despite having around 56,000 people working in tech already, CEO Jamie Dimon has reinforced the need to hire more. Citi, meanwhile, announced a 13% increase in tech spending in June, coinciding with the hiring of 7000 new technology staff.

Citi, however, is in the midst of some major cuts; have they come to a sudden realization that they overhired? Based on job listings, seemingly not. Citi has 673 open jobs in technology: that's more than Goldman Sachs, Morgan Stanley and Bank of America combined... and doubled. JPMorgan has even more openings, with 717 in software engineering. 

Goldman Sachs' Consumer Blunder

Last year, the top tech story out of Goldman Sachs was that its transaction banking service TxB supplanted digibank Marcus as the golden child of side projects. David Solomon went all in on Marcus, but this year saw the final nail be put in its coffin as Goldman announced it was being dismantled.

Marcus isn't the only consumer offering the bank has soured on. Goldman's partnership with Apple for the Apple Card can consider its days numbered, as the FAANG giant reportedly asked to end the collaboration. AmEx was touted as a partner at the time, but CEO Steve Squerri suggested they were out of the running, which could make divorce proceedings for the Apple Card's parents even more drawn out and awkward.  

Conversely, JPMorgan is loving life in the fintech space. It's been doubling down on its commitments to Chase and Chase UK, even recruiting some of Marcus' tech leaders. It's in the process of doubling the size of the Chase team to 2000, as announced at the end of 2022.

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AUTHORAlex McMurray Reporter

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