Traders have no choice but to adapt to the new environment. Automation could cut headcount for Wall Street and the banking industry by 200,000 in the next decade, estimates Mike Mayo, senior bank analyst at Wells Fargo Securities. Almost one-third of financial-services jobs could be displaced by the mid-2030s, according to a report by PricewaterhouseCoopers LLP in 2018.

“Some of the changes coming in with tech can make people feel uncomfortable, like it’s moving too fast and they’re falling behind,” said Niall Cameron, London-based head of corporate and institutional digital at HSBC Holdings Plc which has designed bots to help salespeople respond to clients. “That is unfortunately here to stay because these trends are only getting stronger.”

Quant Minds
Investment firms are also turning to machines to cut costs amid the boom in passive investing. Janus Henderson Group Plc replaced two fund managers with more than a decade of markets experience with a new quantitative team of four in May. New York-based PineBridge Investments, with almost $100 billion of assets, is also focusing on quant skills, leading its existing traders to be nimble.

Chris Perryman, senior vice president of fixed-income trading at PineBridge in London, adapted to survive. Four years ago he moved to a management role and helped hire two university graduates in their 20s to apply a quant approach to trading.

“Ten years ago I could be a good trader, now I couldn’t,” said Perryman. “I don’t have a quant background and that’s 50% of the job now. You need quant skills to handle, organize and rationalize the amount of data that’s available.”

Roosevelt Bowman, who traded bonds at Lehman Brothers back in 2008, learned to code as the firm collapsed. More than a decade later and now senior investment strategist at AllianceBernstein Holdings LP’s private wealth-management division, he uses programming languages such as R and Python regularly in his job in New York.

At UBS, Purves is spearheading an effort to digitize the investment bank’s trading of fixed income and equities and as part of that he went on a course with Silicon Valley’s Singularity University to learn how experienced bankers can evolve and stay relevant.

When it comes to new hires, Purves says, the best candidates are those that have the least to “unlearn.” They are team players with computer science skills who are often new to banking, he said.

Jack Miller, head of trading for Robert W. Baird & Co. in Milwaukee, agrees. For the first time last year, he included proficiency in coding as a requirement for a junior trader job, but hasn’t found anyone yet with the right mix of technical and people skills.

As investors increasingly track indexes rather than actively managing their investments, it’s another example of how machines are curbing the amount of money that individuals can make. The shift to passive investing means that individuals and institutions have low-cost alternatives to traditional asset managers, who’ve responded by cutting expenses, Miller said.

“There is a trickle-down effect that puts pressure on the overall pool of comp available to the sell side,” Miller said. That’s “driven by the buy side being much more cost sensitive.”

--With assistance from Sonali Basak.

This article was provided by Bloomberg News.

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