A Goldman Sachs partner leading one of the bank’s flagship artificial intelligence projects warned that AI’s spread across Wall Street risks hobbling the thinking capabilities of the next generation of financiers.
“There’s a huge danger here that in the era of AI, we outsource our reasoning to these models, and we have cognitive atrophy that stops us being able to reason from first principles ourselves,” said Chris Churchman, who leads Goldman’s digital platform for institutional clients called Marquee.
Just as people lost navigation and memorization skills with modern inventions, bankers risk losing analytical abilities if algorithms handle all the heavy lifting, Churchman said.
The Devil’s Bargain
Wall Street’s push to enmesh AI into all of its trading and banking processes could be a kind of devil’s bargain: it will make the industry more profitable today while potentially eroding the talent it needs for tomorrow.
With AI taking over more of the routine work that has traditionally taught young bankers and traders how to think and make decisions, firms risk sacrificing the culture that turns junior employees into seasoned Wall Street talent. It could even reduce the need for junior bankers in the first place.
Banks need to find a balance between using AI and preserving Wall Street’s apprenticeship culture, said Churchman, who ran currency trading at UBS before joining Goldman in 2021.
The Tacit Knowledge Problem
“You learn by doing, and a lot of knowledge is tacit, it was never written down,” Churchman said. Goldman needs “to make sure we don’t lose that tacit and intuitive knowledge that some of our best people have today [and] to ensure the next generation have it too.”
For instance, junior traders learn by fielding client pricing requests under supervision of experienced risk takers. “We can absolutely automate that,” Churchman said, “but then do we get the senior traders that fully understand?”
Systems must be designed so that employees still call the shots in high-stakes, high-uncertainty decisions rather than becoming passive operators, Churchman said.
Even Goldman hasn’t yet “figured out” how it will manage the transition, said Churchman, who is also co-chair of the firm’s Global Banking and Markets AI working group.
The Accuracy Challenge
Churchman also shared lessons from implementing AI into Marquee. The toughest challenge, from a technical standpoint, is ensuring that AI answers are 100% factual and can be audited. While consumer AI chatbots warn users of possible mistakes, in high finance, the tolerance for errors is low.
Churchman said that in developing the firm’s AI platform, the software made a startling admission: “Look, in the end, I’m better at sounding thorough than being thorough.”
The Bottom Line
Goldman Sachs partner Chris Churchman warns that AI’s spread across Wall Street risks eroding bankers’ reasoning skills through “cognitive atrophy.” He says firms must find a balance between using AI and preserving the apprenticeship culture that trains junior employees. Even Goldman hasn’t figured out how to manage the transition, and Churchman says ensuring AI accuracy remains a major challenge.
