As the Artificial Intelligence (AI) trend intensifies, the pursuit of AI expertise is expanding from Silicon Valley to Wall Street.
Morgan Stanley has taken a significant step by promoting a technology executive to become the bank's first AI executive at a firm-wide level. This move comes amidst ongoing competition among Wall Street's leading banks for top AI talent.
According to an internal memo sent by Morgan Stanley co-presidents Andy Saperstein and Dan Simkowitz, tech executive Jeff McMillan, who was part of the bank's wealth management division, has been promoted to the bank's first head of AI at a firm-wide level. McMillan will be instrumental in guiding the implementation of AI across the firm.
Last year, under McMillan's supervision, Morgan Stanley became the first major Wall Street bank to develop a solution for its employees based on OpenAI's GPT-4.
Industry insiders view this appointment as indicative of the escalating importance of AI within the financial services sector. This rise is attributed to the swift advancement of generative AI tools that can respond to certain requests in a manner akin to human interaction.
The interest in AI is not limited to Morgan Stanley. JPMorgan Chase appointed Teresa Heitsenrether as chief data and analytics officer last June, with a focus on the practical application of AI. Similarly, at Goldman Sachs, CIO Marco Argenti is recognized as a key proponent of AI technology adoption.
The aforementioned memo specifies Jeff McMillan's new role, highlighting his leadership in Wealth Management Analytics, Data, and Innovation, and his pivotal role in advancing technology within wealth management. In his new capacity, McMillan will ensure the bank has a proper AI strategy and governance framework. He will collaborate with business units and infrastructure to identify and prioritize AI opportunities, positioning Morgan Stanley at the forefront of industry-wide AI development and maintaining its status as an AI innovator.
To execute the AI strategy, McMillan will work closely with Mike Pizzi, head of U.S. Banks and Technology, Sid Visentini, head of corporate strategy, and Katy Huberty, head of global research. Huberty and McMillan will co-lead the firmwide AI Steering Group, which includes representatives from various business units and infrastructure components.
Wall Street's Battle for AI Talent
Morgan Stanley's emphasis on AI is reflective of a broader industry trend. Despite substantial layoffs in the past year, major Wall Street banks are locked in a competitive race to recruit and retain AI talent.
Data from consulting firm Evident reveals that Goldman Sachs experienced a net outflow of 60 individuals in AI-related roles over the past 12 months, marking the most significant AI brain drain among the six major Wall Street banks. Bank of America followed with 55 personnel lost, while Wells Fargo reported the largest net gain of 130 AI professionals.
Evident's CEO, Alexandra Mousavizadeh, emphasized that the challenge is not only hiring AI talent but also developing and retaining them, given the numerous alternative opportunities available to them. Although these figures represent a small fraction of the thousands of AI employees at these large Wall Street firms, they underscore the intensity of the competition for AI expertise.
This fierce competition is also evident in the compensation packages for employees specializing in data analytics and AI. These professionals are among the highest-paid employees at Wall Street investment banks. According to a report by recruiting firm Heidrick & Struggles, the median annual salary for AI role employees in the U.S. was $901,000 last year, while in Europe, it was $676,000 for those with AI-related work experience.
In recent months, major banks have stepped up their experimentation with AI technology, recognizing its potential to enhance employee productivity and minimize costs. For instance, Citigroup plans to enable its 40,000 programmers to experiment with various AI technologies by the end of the first quarter. Evident's data indicates that Citi has added 189 AI-focused employees in recent months, although it has also seen 196 AI professionals depart for competitors.
Wells Fargo analyst Mike Mayo acknowledges the indispensability of an AI strategy in the current investment banking landscape, stating, "If you lack an AI strategy as an investment bank, you don't have a strategy at all. The AI fever is here to stay."
JPMorgan Chase also has numerous open positions related to AI. CEO Jamie Dimon envisions that AI technology could enable a reduced workweek to 3.5 days. The bank maintained its leading position in this year's Evident AI Index, which evaluates investment banks based on their AI maturity. Evident's data shows that JPMorgan lost 224 AI-focused employees but added 325 over the same period, resulting in a net influx of 101, second only to Wells Fargo.
Teresa Heitsenrether, JPMorgan's chief data and analytics officer, expressed pride in the bank's recognition for its AI talent, insights, and solutions late last year. She affirmed the bank's commitment to continuing investment in its AI capabilities.
