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Wall Street hits 'peak human'

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I generally hear 2 things from our readers: 1) you most value the sheer volume of quality stories we
 
June 12 · Issue #36 · View online
Tearsheet Weekly Newsletter
I generally hear 2 things from our readers: 1) you most value the sheer volume of quality stories we curate here every week and 2) there’s too many stories :-). This week’s a bit of an experiment – look closely and you’ll see that there are still close to 50 valuable links on finance and technology. But this week, I’ve reformatted the newsletter into working stories around the trends we’re seeing in the market.
What do you think of the new change? Hit ‘reply’ and let me know.
– Zack Miller, Editor-in-Chief, Tradestreaming

Working on the Street: Financial workforce changing
The structure of Wall Street’s current workforce sheds some light on the evolving role of finance in the economy. Top bankers predict that Wall Street has hit peak human – employees will be replaced by algorithms soon enough (some senior managers thing 20% of current staff will be replaced by automation in just a few years).
It’s not just banking and trading losing jobs. Asset managers are feeling the roboadvisory pull and more brokers are, too. Etrade introduces its own robo product (though, explain to me how a 9 member investment team approximates automated software). In search of revenues, other old school wealth managers are being pushed further down market. But, bucking all the trends, Deutsche Bank ditches its own plans to set up a digital banking service.
In a world where Goldman Sachs pitches itself as a technology company (“it has more engineers than Facebook), many top FIs see competition for top talent coming from Silicon Valley, not from their NYC-based neighbors. Jamie D has JPM relaxing its dress code to help make it cooler to work in finance. GS doesn’t seem to share the same concerns, though – it’s processing 250k student jobs applications, a 40% increase over 2012. 
Of course, the vast majority of these jobs are destined for men, as women still struggle to break into hedge funds (and finance, in general). For young'uns, getting a CFA isn’t a panacea, either. Can you believe that 75% of job listings which require a CFA have salaries of $60-$100k associated with them?
Other news worth reading:
Online lending getting wacky
Just when it seems like things can’t get worse for the marketplace lenders, well, it can. Reuters highlights a growing problem: Many online lenders have failed to detect the “stacking” of multiple loans by borrowers who slip through their automated credit processes. Never fear, experts advise that some simple fixes can keep the stackers out, but current practices don’t instill confidence (at least, optically).
You can almost hear the breaks engaging as Prosper, a leading marketplace lender, puts limits on new borrowers and turns off the tap on its relationships with loan referral websites, like LendingTree and Credit Karma.
When blood runs in the street…all this turmoil has to be good for someone. Ousted Lending Club founder and CEO, Renaud Laplanche seems to be readying a takeover of his previous firm. It’s a shame because there is so much potential and $$ for marketplace lending here and abroad, if only some of these financial institutions can figure out how to get a grip on internationalization and language issues
Also, don’t fret over (some) growing underperforming Lending Club loans in your portfolio - new roboadvisors can help you prune those bad apples out.
At least we have our personalities in the space: SoFi’s Mike Cagney is being called the Donald Trump of fintech
More interesting tidbits on fintech:
Money management on the ropes
Indeed, according to some in the biz, fintech is ending money management as we know it. Of course, it’s not ending it – it’s the as we know it part that’s up for grabs. Roboadvisory is still small but the writing is on the wall for most plain-vanilla, circa 1% AUM, type business.
Equity crowdfunding, when it was first envisioned, seemed like a white knight for the fundraising business but after 4 years of regulatory wrangling, we still shouldn’t expect anything to change just yet.
Inching closer to banking with Facebook Messenger
The new Facebook Messenger platform will affect the banking industry significantly because most banking services are tasks that can be automated, and instructions can be provided in simple human language (e.g. “pay my Internet bill”). Here’s how it will change banking.
Dyme has developed a prototype of a Facebook Messenger bot for financial services. Here’s what it looks like.
Cashless society? Maybe. In Sweden.
There are signs that cash is following the path of other “information goods,” such as printed photographs, cassette tapes, and DVDs in being replaced by digital alternatives. Here are the countries that would benefit the most from a move to a cashless world.
P.S. Sweden leads the race away from cash (only 2% of value of all payments in the country are in cash).
Bond trading startups
With bond inventory levels down 80%, there needs to be a better solution for the institutional investors in corporate bonds. Technology is stepping in and it’s not easy to build a dual-sided marketplace. Here’s how some top bond trading startups are addressing the chicken and egg problem of bond trading platforms.
Want to learn more? Here are 4 top bond trading startups.
FT Partners' report on digital wealth management
FT Partners' new report on digital wealth
FT Partners new report on digital wealth industry
Where fintech is headed next
Lots of things are changing in finance right now – some have shorter cycle times and others, well, they’re going to slowly happen over years.
Here are some big picture articles on fintech:
Startups raising/Investors investing
Tradeshift raises $75m to expand its invoicing platform to new verticals
Rules are a changin'
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