Goldman Sachs uses technology to improve efficiency of junior bankers
Goldman Sachs’ investment in technology is beginning to pay off as projects driven by CIO, George Lee, over the past 18 months are integrated into the business. Last week the bank announced a series of new initiatives designed to facilitate the role of its junior investment bankers, including new technological platforms to do much of the ‘grunt work’. The company has built tools to help analysts put together IPO documentation, cutting time spent by 90% and is working on a similar tool for ground work on M&A deals. Last year the firm also led a $15m funding round in Kensho, a financial data service company which helps automate knowledge work to answer complex financial questions in real time. 

Goldman Sachs CEO Lloyd Blankfein. Goldman Sachs

Entry-level jobs on Wall Street are notoriously grueling.

Life as a junior banker has traditionally meant long hours, late nights, and doing the grunt work that the senior bankers pass on.

Goldman Sachs is trying to change that.

The Wall Street giant announced a handful of initiatives Thursday designed to make things a little easier for junior bankers — and to encourage them to stay on longer than the two-year mark, when many bankers leave.

Earlier promotions

Typically investment banks hire "analysts," or junior bankers, for a two-year program directly out of college.

After the analysts put in their two years, most move on to jobs with hedge funds or private-equity firms — or in another industry altogether.

Bankers who stay on usually do a third year as an analyst before being promoted to associate. Several years after that, they are promoted to vice president.

Goldman did away with its two-year analyst program a couple of years ago in an effort to encourage junior bankers to see themselves at the bank more long-term.

Now, the bank is going to start promoting top investment-banking analysts to associates after only two years at the firm.

That means they'll get a pay raise sooner than they normally would. Across Wall Street, associates earn about $63,000 more than analysts, on average.

And, importantly, analysts will hear about their likely promotion earlier on, too — around six months into their first year at the bank. That's the same time that hedge funds and private-equity firms start reaching out to the bank analysts to recruit them.

A picture from Goldman Sachs' Hong Kong offices. Junior bankers in their third year at Goldman Sachs will now have the option to go on a rotational assignment. Goldman Sachs

Doing rotations

Goldman is also introducing a formal "mobility program" for junior investment bankers in their third year.

That means that after completing two years in one assignment, analysts — some of whom are promoted to associates — will go on rotational assignment for another full year.

The move could be small — within one particular business or business unit — or it could be as extreme as moving to the other side of the world for a year.

"We're basically going to tell people: You spend three years with us, you're going to get two distinct experiences," said Goldman's cohead of investment banking, David Solomon.

The bank will also hire between 10 and 50 new managers to oversee the junior bankers. A new role, called "Junior Banker Sponsor," will be created in each regional office.

Leaving the grunt work to the robots

A third initiative will see changes in the type of work that Goldman's junior bankers are doing.

One of the reasons investment banking is becoming a less attractive option for college graduates is because of the monotonous, grueling work that junior bankers have to do.

One hedge fund intern hoping to skip the banking process and go directly to the buy side told us: "A monkey could do the job of a junior banker."

So Goldman is introducing new technological platforms to pick up some of the grunt work. That way, analysts can focus on more "value-add" work.

Some hedge fund interns think that "a monkey could do the job of a junior banker." Goldman Sachs is building algorithms to do it instead. Reuters/Ilya Naymushin

"We've been very, very focused on building out technology platforms that help us do that," Solomon said.

He added: "A lot of the things that we do for clients have historically been very human-capital intensive, but with technology today and the platforms you can develop and the way information is used today, a lot of this stuff is not as value-added as it used to be."

The bank has already introduced new platforms to help analysts put together initial public offering timelines and fee runs. Each of those tasks used to take bankers about six hours. The new platforms can do them in about 30 minutes.

A new "Ask GS" service, built from an algorithm, has reduced the number of email blasts that analysts send by 98%, according to Luke Sarsfield, COO of Goldman's investment-banking division.

David Solomon, cohead of Goldman's investment banking division, said he wants the opportunity to develop "the best people." Goldman Sachs

And going forward, the bank will introduce other platforms, including one to help analysts with the grunt work surrounding mergers-and-acquisitions deals.

"We're building a technological solution around a deal life cycle," said Sarsfield.

Goldman Sachs already has robust strategic-services resources for analysts. Resources range from presentation services that will make nice-looking slides for analysts to a data group that can pull multiples or build charts at a moment's notice.

This initiative will expand upon those services, which are all available to junior bankers on a proprietary company website.

Obviously, Solomon said, the firm will never be able to retain 100% of its junior bankers.

"Everything that we're doing is to try to give us the best opportunity to develop the best of those people and have a subset of them want to build their careers here," he said. "Not all of them, but a subset of them."

Find more on junior bankers, interns, and young Wall Street here.