On Artificial Intelligence and the New Generation of 'Strats'

30 JAN 2018

The following article first appeared in the January 29, 2018 edition of BRIEFINGS, a weekly email from Goldman Sachs about trends shaping markets, industries and the global economy.

In Goldman Sachs' Securities Division, the people focused on structuring, quantitative finance and engineering—known as "strats" within the firm—work in a variety of roles, ranging from modeling risk and writing complex algorithms to engineering technology platforms and analyzing data. Strats are playing a critical role in the transformation of the Securities business as trading has become more electronic. Thalia Chryssikou, co-head of Global Sales Strats and Structuring across FICC and Equities, shares her thoughts on the evolution of strats' roles at Goldman Sachs and across the industry.

As strats have become a larger influence across trading desks, what are some of the biggest trends you're seeing?
Thalia Chryssikou: In the Securities business, the strats we hired 10 to 15 years ago typically specialized in modeling risk and pricing analytics. Today, we're focused on hiring a new generation of strats who specialize in data management and analytics, including machine learning (ML), artificial intelligence (AI), program management and digital product design, in addition to quantitative sciences. That shift, in part, reflects the broader changes that have reshaped the Securities business where participants across the globe operate with growing information sets and communicate digitally. Strats now comprise 27% of the Securities Division at Goldman Sachs, up from 18% five years ago, and we're just as focused on bringing in experienced hires as we are on people straight out of college.

If AI and ML are big drivers across the business, how is that being reflected in the type of work strats are focused on?
TC: Given the enormous amount of data being generated by the business, our strats now have the opportunity to apply AI and ML techniques to that data to derive business insights that will accelerate our ability to serve clients better, while keeping in mind our regulatory compliance obligations. There is also a significant amount of important foundational investment to enable that analysis. This includes streamlining our workflow with clients, creating the infrastructure to capture and store the raw data, and modelling and curating the data along multiple dimensions to enable further use. Technology and business transformation veteran Jeff Wecker just rejoined the firm as Chief Data Officer, and we have also hired Matthew Rothman in Securities to head Data as a Client Service.

It sounds as if strats fit into the theme of investing in technology more broadly. What have been the drivers for the industry and for Goldman Sachs?
TC: Quite simply, serving clients today means empowering our business with software and engineering. A key part of the firm's growth initiatives relies on making significant investments in engineering, both to enhance the client experience and improve operating efficiency and scale. Almost nothing we do to service our clients -- from trade execution, regulatory compliance and the advanced quantitative analysis we touched on earlier -- could be possible without investments in technology and engineering. It is essential and our hiring in the business reflects that.