Artificial intelligence and machine learning have already made their imprint on investment banks and other financial firms. The main applications currently revolve around trading, but people like Alexander Fleiss believe the technologies will eventually be adopted at every rung, replacing the need for bank employees in ways that people have yet to imagine.
Fleiss is the CEO of Rebellion Research, a New York hedge fund and robo adviser that relies on AI and machine learning, as well as a guest lecturer at several universities, including Yale School of Management. We talked to him about the disruptive capabilities of AI and the potential ramifications for banks and big tech firms. He also made one bold prediction and provided some advice for people who want to make a career out of artificial intelligence.
Are AI and machine learning job killers at big banks?
Just look at the last jobs report. AI will create many jobs in time, but there is going to be a disconnect before enough people are educated to make up for any of the losses in the short-term. Finance headcount is going to drop like railroad stock in the 50s. But the banks themselves will do well. They’ll continue to cut costs as they incorporate more intelligent learning processes.
Are all hedge funds destined to be quant funds?
No. I believe traditional traders will always exist. There is room for both.
How will banks fare in the recruiting war over AI talent?
It’s the tech companies that are going to take over the world. We are in the midst of a total AI arms race. You look at Amazon, Google, Facebook and Apple – no one else is pouring more money into AI. These four companies are going to be so far ahead. Someday Amazon will buy a J.P. Morgan or a Wells Fargo. They’re going to buy one of the top three banks in the country within the next five to 10 years. I believe that’s part of why they are coming to New York. Amazon and Alibaba are spending more on machine learning than anyone on the planet.
What’s the best way to launch a career in AI and machine learning?
Start by taking introductory classes. Stanford has some of the best AI courses available under [Google Brain co-founder] Andrew Ng. MIT is great. AI programs are popping up left and right. Follow everything the Allen Institute is doing.
In terms of getting a job, a company like Amazon wants to see that you can work with machine learning tools; you don’t actually need to build them. The technology is important, but it’s all about how you apply it. Companies want people who can discover and implement new applications. When it comes to AI, we are at the dawn of the dawn. Cortez has burned his ships. This is actually the third AI cycle – there was one in the ‘60s and one in the ‘90s – but this is the first time we’ve really broken through the threshold to implementation. It’s an exciting time.
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