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BREAKING DOWN THE SILOS: Training Analysts to Code and Programmers to Analyze
BREAKING DOWN THE SILOS: Training Analysts to Code and Programmers to Analyze
EDUCATION | PREMANAND DHEENADAYALAN, SPECIAL TO NEW BANKING YORK
In spite of the COVID-19 environment, artificial intelligence and machine learning are rapidly spreading through the financial services section. With this in mind, it is important for financial institutions to prioritize training for their people, or they will be left behind.
The days when programming could be left to the engineers in the IT department are already gone. Some of the best software applications in finance were developed by people outside of IT. They had a problem, and technology was the tool they used to solve it.
Take the story of a stock analyst who decided to learn Python—a skill that is becoming a minimum requirement for people at all levels of finance. As he developed his programming skills, he eventually created an artificial intelligence platform used today to buy and sell fixed-income instruments. He had a problem, saw a solution and used technology as a bridge to get him from Point A to Point B.
Basic Understanding Of Programming
A basic understanding of programming is crucial for analysts to effectively use the tools they have been given, even if they never create an application of their own. Over the past several years, programming literacy has become an increasingly common core requirement sought by job recruiters in the financial industry. Workers who do not have this core literacy will soon be outpaced by those who do.
Knowing how to create and run a basic query can save time and energy spent on manual research and prevent human errors that work their way into manual processes. Think of it like driving a car. Drivers don’t need to be mechanical engineers, but if they have a basic understanding of how the engine, the transmission and the safety systems work, they will be faster, safer and better drivers.
Even the technologically fearful can learn Python, a language so simple it is often taught in elementary schools as an introduction to coding. Reassure employees that artificial intelligence is not some soulless robot coming to take away the vital human element of investment and trading decisions. It is instead the most efficient assistant you can imagine, handling time consuming manual tasks in an instant and providing the research and data points analysts and traders need to do their job.
A basic understanding of programming is crucial for analysts to effectively use the tools they have been given, even if they never create an application of their own.
Machine Learning: The Analyst’s Best Friend
In markets where data is moving quickly, machine learning platforms are an analyst’s best friend. Machine learning algorithms automatically adjust as the data changes, providing accurate predictions of market behavior and eliminating human foibles like loss aversion and confirmation bias while still giving humans the space to interpret and act on the data. While the vision for many platforms is for trades to be possible computer to computer, today most machine-assisted trades still require human review of the data and the software’s recommended course of action.
Programming can be used in asset management, risk management and trade management. It can automate routine research queries, finding data in seconds that manual research would take hours to put together. Analysts who thought they were doing just fine using Microsoft Excel will be amazed at how much more robust and efficient their financial models can become and how much valuable time they will get back using a more advanced platform.
Cross-Training Bandwagon
Big firms including Citi, JP Morgan and Goldman Sachs have already jumped on the cross-training bandwagon, creating internal training curricula to teach computer programming to employees in departments outside of IT. This kind of corporate investment is important, both to make training available to workers who want to deepen their skills and to demonstrate to the entire company that cross training and technical literacy are corporate priorities.
In addition to teaching its traders how to code, Goldman Sachs launched an initiative several years ago to teach IT gurus how to trade. After all, a programmer who understands the needs and goals of a company’s trading system is better positioned to see its weaknesses and innovate new solutions.
When consumers look up their bank balance, sometimes they see a notice that the number “may not reflect the latest balance.” This technical delay is inconvenient to individuals. For portfolio managers, however, it could be disastrous. Imagine a technical error occurs while data projecting the cash balance of a portfolio is being
calculated. If the error causes the program to project too low, the manager might miss an opportunity to invest. If the program projects too high a number, the manager might overinvest and incur an overdraft fee. A large investment could result in overdraft fees up to $40,000. If the programmer understands these potential impacts from the outset, they can carefully design the system to avoid them.
Technology-Driven Environments
Programmers who understand how their systems are being used and what could happen if something goes wrong are better equipped to create the kind of robust platforms that can compete in markets increasingly driven by technology. From a worker development standpoint, these professionals are also likely to become loyal employees willing to work hard for a company that gives them opportunities to expand their skills and advance their careers.
Imagine if the software developers who created the anti-stall software in the Boeing 737 Max had better understood what would happen after their software prevented a stall. The software worked by repeatedly forcing the nose of the plane down, a common maneuver to get out of a stall. However, investigators said, the system did not stop quickly enough to allow human pilots to recover the aircraft’s flight pattern. This error has been partially blamed for two deadly plane crashes.
This year promises to be one of great upheaval in financial markets. The companies who come out ahead will undoubtedly be those with the most agile, efficient and cross trained work force.
Premanand Dheenadayalan is a highly skilled professional working as an Assistant Vice President with a leading investment management firm. He has 13+ years’ experience in providing software engineering solutions in the financial services industry. For more information, please contact premthecoder@gmail.com
