Top Wall Street analysts claim that technology development is driving banks. Alphacution illustrates how banks have all but lost the tech battle in a critical corner of the market ecosystem...
"I don't know where I'm going from here, but I promise it won't be boring." - David Bowie For someone who has spent a career scanning the landscape for cataysts - as if in perpetual "sentry mode" - it's damn near impossible to consume the latest news and not become introspective. Perhaps that is merely the occupational disposition of someone who regularly commits thoughts to pixels. It's difficult to conjure up this week's musings on the state of play without a corresponding level of seriousness and mood to risk opening Pandora's Box with a brief flurry of thoughts that are worth writing - and reading. Anyway, here we go: With the scent - and evidence - of economic upheaval in the air, I thought it would be a good time to revisit one of our older themes, the Investment Bank Headcount Index. The last time we touched on this topic was a year ago in, "How Many Heads Does It Take To Run A Bank?" It's never been a wildly [...]
Though still tracking at levels last seen in early 2007, Alphacution's index of "bulge bank" headcount - updated through year-end 2017 - continues to walk a tight rope of relative stability as it has continued to do so for most of the past 8 quarters (see exhibit below). This news also seems to track with the prevailing belief and commentary that the US economy is in relatively good shape - if not, at least, stable. As always, a look into the details - and specific banks - yields a more vivid story: For starters, and including Wells Fargo & Company (WFC), 5 of the 10 banks in this analysis are within 5% of their maximum headcount over the past 45 quarters. (Goldman Sachs and RBC are within 1%.) Meanwhile, with the index down approximately 150,000 employees from its high water mark in mid-2011, Citigroup and BAML have shrunk by 166,000 and 81,000, respectively, from their maximums. Rankings of individual bank headcount indices can be found below... WFC, the largest US [...]
It's only happened twice since the peak, recorded nearly 6 years ago (at the end of Q3 2011): Alphacution's bulge bank headcount index has recorded a rare uptick, as of the end of Q2 2017 (see Exhibit, below). Now, of course, it may be too soon to sound the trumpets that a major turn has been made for headcount in the global banking sector. The moves - in either direction - are still small. Although, who knows? Maybe the expectation of regulatory rollbacks has got bank hiring managers feeling more exuberant of late. Or, maybe - as we suggested in our prior post - that process automation, particularly among quant shops, actually requires more people is something that applies more broadly in financial services (given the push to implement more AI). One thing is for sure, most of our bulge banking tracking sample (7 of 9) is bigger in terms of headcount than they were more than 10 years ago. Only UBS and Citi are smaller, but that has been [...]