• Wall Street firms are eager to crack the code on AI to drive productivity and save costs.
  • AI hype has put tech leaders centerstage, setting strategies that go beyond pure technology.
  • Tech leaders from Citadel, Goldman Sachs, and AllianceBernstein talk about how the job has changed.

When Ken Griffin, the billionaire CEO of the hedge fund Citadel, took to the stage at the biggest financial conference of the year in May, he threw a spotlight on a mostly behind-the-scenes figure on Wall Street.

“The most powerful part of the AI story thus far is the chief technology officer, chief information officer,” Griffin said at the Milken Global Institute. That person “now has a very important seat at the table. They’ve got the attention of the CEO,” he said.

At the most profitable hedge fund of all time, that person is Umesh Subramanian, Citadel's chief technology officer. As the top tech exec, Subramanian leads the engineering teams that power Citadel's investment, research, and risk-management platforms. But in the age of generative AI, the role of the CTO has evolved into something that reaches far beyond the back office.

A CTO or CIO used to be focused on "raw technology" like data, compute, databases, and software, Subramanian told Business Insider. But now, the role is evolving into "one where the CTO is heavily integrated into the commerce of the firm," he said.

In a recent meeting Subramanian had with another Citadel leader, engineering execution was on the docket. But they also discussed strategic business priorities, like scaling that particular business, managing risk appropriately, and most importantly, "the real commercial problem at hand, not just on the tool," Subramanian said.

Nearly two years after OpenAI introduced ChatGPT, finance firms are still trying to figure out the best ways to leverage generative AI for their own businesses and workers.

Though it's still early days, the human-like technology is seeping into nearly every corner of Wall Street, from investment banking and research to customer service. The strategic decisions made today, such as which vendors to partner with or the most effective way to retrain employees, will set the competitive landscape for years to come.

Leading those conversations are CTOs and CIOs, who are expected to usher in cultural changes and prepare workforces across the firm to take advantage of generative AI, in addition to their regular day jobs overseeing tech and engineering.

"A lot of this is going to be about cultural change, transformation around culture" Andrew Chin, the recently named chief AI officer at the $704 billion money manager AllianceBernstein, told BI. "How can we reimagine how we do things differently going forward?"

The importance of that transformation can be seen in the appointment of tech leaders to higher management positions. Though "it's not obvious for engineering" to have a seat on strategic leadership committees, noted Goldman Sachs' chief information officer, Marco Argenti, he, Chin, and Subramanian all do. Some finance firms, meanwhile, have recruited tech chiefs from rivals, like Wells Fargo's hiring of Bridget Engle from BNY Mellon. Engle, who joins Wells Fargo mid-August, will sit on the bank's operating committee.

Why the AI is different than previous technology waves

Some experts, like Accenture's global banking data and AI lead, Keri Smith, say generative AI's pace of innovation and global adoption is unprecedented.

Compared with past technology waves, like the internet, mobile phones, and the cloud, generative AI "has become front and center from a strategic and also an investment perspective in a year and a half or so, almost from zero," Argenti, told BI.

"That's why people are feeling a sort of urge to catch up to first understand, then to try and strategize around it," the Goldman Sachs CIO said.

For Argenti, who was a vice president at Amazon Web Services before joining Goldman in 2019, that has meant more time advising external clients to help them shape their own view and strategy on the technology. Investment banks, like Goldman Sachs, are betting on corporate America's obsession with AI will kick off a new era of mergers, acquisitions, and fundraising.

"The level of investment right now in AI, trickling down the whole value chain, is no longer only a technology investment," Argenti said. Cutting across sectors, including energy, real estate, and infrastructure, "there is almost like an AI economy that is shaping up, of which the fundamental nucleus is a strong technology component," he added.

Management teams across industries are beginning to ask questions like "Can you help me understand how this can improve my bottom line, either increase my top line or reduce my cost pressure?" Citadel's Subramanian said. "That then invites the CTO into a conversation" they might previously not have been a part of pre-AI hype, he said.

Tech leaders need to rewire workers

In addition to more conversations with clients and business leaders, Argenti is meeting more regularly with the head of HR.

That's because a "fundamentally important" piece of the puzzle will be getting workers up to speed, Argenti said. In some cases, that'll mean teaching employees new skills, like asking the AI questions in a specific way to yield the best response. Other times, it'll mean coming up with new processes for routine tasks, like catching up on long email threads or making pitch books and presentations, Argenti said.

But so far, finance firms are falling short when it comes to educating their employees, according to data from Accenture. A January report found that only 7% of banking and capital-markets organizations are actively reskilling their workforces at scale. The lack of transparency around firms' rollout of AI tools and their approach to upskilling are a source of frustration among Wall Streeters, Accenture's Smith said.

Curbing enthusiasm and demystifying the hype

Generative AI's potential to drive productivity and transform businesses has put Wall Street's tech leaders in a tricky spot when it comes to cutting through the hype.

"There's a cohort who believes that AI is magic, so I actually have to take them off that ledge," AllianceBernstein's Chin said of setting expectations.

Tech leaders across Wall Street need to find balance between gaining a first-mover advantage while not moving too fast and exposing the firm to risks.

There are still unsolved technical challenges, like generative AI's tendency to make up information, ensuring proprietary data is not leaked, and being able to explain how the model arrived at its answer. Building guardrails to enable large workforces to leverage the technology without introducing vulnerabilities or unintentionally spilling confidential info takes time.

Goldman's Argenti, who recently rolled out a generative AI helper for the bank's engineers, said he had to push back against a swath of engineers who wanted the coding tool sooner.

"You go slow to go fast," Argenti said. "At the beginning of the process, yes, I had to curb people's enthusiasm a little bit," he added.