Melissa Webster • Our interviewees • The rest of our research group (Georgia Severson, Emery Fertic, and Nadine Gibson) • MIT professor Andrew Lo and MIT Sloan PhD students for their research into genAI and finance 3
type of AI trained on vast amounts of text to understand and generate human-like language. • Artificial General Intelligence (AGI) – A future form of AI that can perform a wide range of cognitive tasks at or beyond human level across different domains. • Hallucinations – When AI tools produce inaccurate or fabricated information that appears plausible but is incorrect. • Investment Banking (IB) – A sector of finance that helps companies raise capital, advises on mergers and acquisitions (M&A), and provides other strategic financial services. • Deal Sourcing – The process of identifying and evaluating potential investment or acquisition opportunities. • Due Diligence – The investigation and review of a company’s financial, legal, and operational information before a deal. • Pitchbook – A presentation document investment bankers create to pitch ideas, deals, or investment opportunities to clients.
surface potential deals faster than analysts Market research: LLMs synthesize thousands of research reports and market signals into actionable insights Due diligence: AI reviews contracts and data room documents, flagging red flags and summarizing key points Administrative tasks: GenAI automates coding, compliance memos, and scheduling to act as a digital co-pilot Pitchbook generation: GenAI drafts valuation models, slides, and scenario analysis to accelerate pitch preparation Client communications: AI drafts emails, summaries, and meeting notes so bankers can focus on tailoring and relationship building These emerged as the 6 most common use cases to support banks’ strategic priorities 12 Sources: MIT Technology Review, “Finding Value in Generative AI for Financial Services” (Nov 2023)
banking Enterprise wide LLMs: Deployed to thousands of employees Individual banker tools: Used ad hoc by individual bankers or small teams s - Slide generation, valuation checks, marketing copy, writing and communication support - Standalone apps, browser extensions, or add-ons to Microsoft Office - Minimal governance usually in gray areas - Scale productivity and decision-making across entire divisions - Automate IPO drafting, summarize research, code generation, CRM integration - Embedded into internal systems 13 Sources: Morgan Stanley, “Morgan Stanley Research announces AskResearchGPT powered by OpenAI” (Oct 23, 2024) Bloomberg, “Introducing Bloomberg GPT, Bloomberg’s 50 billion parameter large language model, purpose-built from scratch for finance” (Mar 30, 2023)
due to regulatory, legal, or cultural caution - Bans on public genAI remain - Focus on low risk pilots in back office - Data compliance and privacy take precedence over speed UBS, Bank of America, Wells Fargo Moderate adoption Phased, internally governed rollout of genAI tools - Internal platforms built with secure data controls - AI used in document drafting, coding support, internal summaries - Human required for any client-facing outputs J.P. Morgan, Citigroup, Deutsche Bank Full adoption Embedded genAI across workflows with company-wide buy in - AI used in IPO drafting, client comms, financial modeling - Bank-wide tools deployed to thousands of staff - Governance and risk teams integrated with AI strategy Goldman Sachs, Morgan Stanley, Barclays 14 Source: Business Insider, “Everything we know about how Wall Street giants are adopting AI, from J.P. Morgan to Blackstone” (Jul 2, 2025)
Observation and R&D Banks explore genAI usage quietly & no clear regulation or tools/use cases 2021 Public LLMs & first bans ChatGPT release sparks interest but hallucination & data concerns cause J.P.M., GS, and Citi to ban genAI use 2022 Controlled pilots MS launches GPT 4 assistant, GS automates IPO drafts, Deutsche Bank runs pilots, & governance introduced 2023 Scaling deployments JPM rolls out LLM suite to 60k+ employees and AI training programs and steering programs emerge 2024 AI as core infrastructure GS’s AI Assistant goes live, genAI integrated into all aspects of job, & junior roles shift 2025 15
Morgan. I want us to win this arms race.” - Jamie Dimon (CEO, J.P. Morgan) Source: Business Insider, “Jamie Dimon says AI will have ‘extraordinary’ consequences’” (Apr 8, 2024) 16
Data confidentiality Hallucinations Ownership of intellectual property Mitigation strategies: 1. Banks restrict genAI usage to proprietary or vendor controlled systems 2. Employees are prohibited from entering client confidential data into external tools 3. All AI outputs for client or regulatory use require human oversight 4. Tools provide source links for verification 5. Banks treat AI outputs like employee work products (owned by the firm) 6. Legal agreements with AI companies ensure banks retain legal rights and are not used for training data 17 Sources: Business Insider, “Amazon, Apple, and 12 other major companies that have restricted employees from using ChatGPT” (Jul 11, 2023) KPMG, “Exploring the role of genAI in investment banking” (Mar 14, 2024)
Banks that scale genAI faster can unlock deal speed, reduce costs, and improve insights Partnerships w/ tech firms Collaboration with AI vendors (OpenAI, Microsoft, AWS) is now a core part of tech strategy Maintaining human touch Human oversight remains essential for client trust, judgement calls, and regulatory compliance Emphasizing trust & quality Firms must build guardrails to prevent hallucinations, data leaks, and reputational risk 19 Sources: Reuters, “J.P. Morgan launches in-house chatbot as AI-based research analyst, FT reports” (Jul 26, 2024) Quartz, Morgan Stanley has a new OpenAI-powered assistant for its financial advisors” (Aug 6, 2024)
1 Shifted focus on higher level tasks 2 Increased training to use genAI tools properly 3 Faster and more productive daily workflows 4 More upskilling and career development 20 Source: Fortune, “Junior analysts, beware: your coveted and cushy entry-level Wall Street jobs may soon be eliminated by AI” (Jun 2, 2025)
and genAI oversight tasks Reduced Entry Level Positions: Companies find it more cost effective to delegate these time-consuming jobs to AI Heightened Competition: Now, graduates are competing with other graduates along with recently laid off workers for fewer total positions Emerging Roles: Demand for AI-aware roles such as data analysts, machine learning experts, and aI supervisors is growing Reduced Learning Opportunities: As AI takes over entry level tasks, there are fewer opportunities for new hires to learn roles traditionally GenAI is reshaping traditional banking career paths 21 Skill gaps: Recent graduates do not possess the AI skill level and experience that firms are looking for in entry level positions Source: EY, “How artificial intelligence is reshaping the financial services industry” (Apr 26, 2024)
Revenue per employee has not yet risen significantly, mainly due to market slowdown and early-stage adoption. Quality Improvements Unmaterialized Revenue Gains Long-Term Revenue Growth 22 We must continue monitoring the effects of genAI to see if productivity gains and revenue growth are directly correlated. Source: Deloitte Insights “Unleashing a new era of productivity in investment banking through the power of generative AI” (Jul 2023) , Bank of America, CEO Brian Moynihan on their second quarter earnings call (Jul 16, 2024) Deloitte Reports, Global Revenue Fiscal Years 2023 and 2024.
and Equity Offerings Testing Deal Structures Balancing Debt, Equity, Pricing, and Covenants 24 Source: Business Insider, “Almost half the work banks do could be ‘redefined’ by 2030. Here’s a breakdown” (Jul 3, 2025) New York Post, “Goldman Sachs launches AI tool – fueling fears that ‘rise of machines’ could hit jobs” (Jun 23, 2025)
Advising 25 Tasks Requiring Human Oversight Complex-Strategic Advisory Relationship-Driven Roles Regulatory & Cultural Navigation Roles Financial Agreements and Advising Final IPO and Syndicate Pricing Source: Business Insider, “Almost half the work banks do could be ‘redefined’ by 2030. Here’s a breakdown” (Jul 3, 2025) Knowledge at Wharton, “AI Can’t Replace You at Work. Here’s Why.” (Jul 3, 2024)
26 Industry Employment Increasing With GenAI implications weighed, industry employment projections continue as positive - Business and Financial Operations employment is expected to increase 6.9% between 2023 and 2033 - Financial and Investment Analysts are expected to see a 9.5% increase in employment between 2023 and 2033 Redefinement Predictions Investment Banking will be redefined 33% by 2030 - Based on mapping of 260 IB specific AI processes, the field of Investment Banking will experience significantly less upheaval than other banking sectors, but still significant change is headed toward the industry Rising Competition More people competing for fewer positions in an already competitive sector - Fewer Junior Analyst Positions predicted to be offered - Most significant rise of unemployment in the business and financial sector was for workers ages 22-27 - Rising numbers of college graduates Source: U.S. Bureau of Labor Statistics “AI impacts in BLS employment projections” (March 11, 2025) Wall Street Journal, “AI Is Wrecking an Already Fragile Job Market for College Graduates“ (July 29, 2025) Burning Glass Institute, “No Country for Young Grads” (July 2025) Business Insider, “Almost half the work banks do could be ‘redefined’ by 2030. Here’s a breakdown” (July 3, 2025)
all levels Artificial General Intelligence surpasses human capabilities in varied cognitive tasks Wide Scale adoption leads complete AI replacement of positions from entry-level to executive Cybersecurity, Deployment, and AGI Governance of these emerging systems industries are created and filled 20** AGI Impact Timeline 27 Source: David Krause “The Impending Disruption: The Transformative Effects of Artificial General Intelligence on Employment in Financial Services” (Mar 10, 2025)
• Banks are embedding the technology across deal sourcing, due diligence, and client communications • Both enterprise LLMs and niche tools are in use GenAI is accelerating • Faster deal turnaround, better insights, and cost efficiencies • Competitive advantages go to firms scaling genAI strategically and with strong governance • More successful banks are addressing major risks (data confidentiality, hallucinations, and IP ownership) Early adopters are gaining advantages • Analyst roles are shifting towards oversight and higher level tasks • Standard “junior analyst to associate” path is narrowing • More AI fluency and entrepreneurial initiative is required for new entrants Careers are evolving
investment banking workforce 1. How will the reduction in entry-level roles affect long-term talent pipelines? 2. What new types of AI-literate roles will emerge, and how will banks recruit for them? 3. How will relationship-driven roles evolve alongside automation? How banks can position themselves for competitive advantages 1. Which adoption strategies will deliver the fastest and most sustainable gains? 2. How will partnerships with AI vendors shape industry competition? 3. What governance models will best balance innovation and risk control? How will firms decide to use AI in their daily workflows 1. Which roles could be fully replaced versus permanently human-led? 2. What new industries and functions will AGI governance, deployment, and cybersecurity create? 3. How can professionals future-proof their careers against full-scale automation? 30
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