Automation is taking place at warp speed displacing employees from all walks of life. 

Next could be you!

According to a recent report, the U.S. financial industry will depose of 200,000 workers in the next decade because of automating efficiencies.

Yes, humans are going the way of the dodo bird and banking will effectively become algorithms working for a handful of executives and engineers.

The x-factor in this equation is the $250 billion annually that banks spend on technological development in-house which is second highest after the traditional tech giants.

Welcome to the world of lower cost, shedding wage bills, and boosting performance rates.

We forget to realize that employee compensation eats up around 50% of bank expenses.

The 200,000 job trimmings would result in 10% of the U.S. banking sector getting axed.

The hyped-up “golden age of banking” should deliver extraordinary savings and premium services to the customer at no extra cost.

This iteration of mobile and online banking has delivered functionality that no generation of customers has ever seen.

Gutting bank jobs will naturally occur in the call centers first, because they are the low-hanging fruit for the automated chatbots.

A few years ago, chatbots were suboptimal, even spewing out arbitrary profanity, but they have slowly crawled up in performance metrics to the point where some customers are unaware they are communicating with an artificially engineered algorithm.

The wholesale integration of automating the back-office staff isn’t contained to the rudimentary part of the staff.

The front office will experience a 30% drop in numbers sullying the predated ideology that front office staff are irreplaceable heavy hitters.

The front-office staff has already felt the brunt of downsizing with purges carried out from 2022 representing a twelfth year of continuous decline.

Front-office traders and brokers are being rapidly replaced by software engineers as banks follow the wider trend of every company transitioning into a tech company.

The infusion of artificial intelligence will lower mortgage processing costs by 30% and the accumulation of hordes of data will advance the marketing effort into a potent, multi-pronged, hybrid cloud-based, and hyper-targeted strategy.

The last two human bank hiring waves are a distant memory.

The most recent spike came in the 7 years after the dot com crash of 2001 until the sub-prime crisis of 2008 adding around half a million jobs on top of the 1.5 million that existed then.

After the subsidies wear off from the pandemic, I do believe that the banking sector will quietly put in the call to trim even more.

The longest and most dramatic rise in human bankers was from 1935 to 1985, a 50-year boom that delivered over 1.2 million bankers to the U.S. workforce.

This type of human hiring will likely never be seen again in the U.S. financial industry.

And if you thought that this phenomenon was limited to the U.S., think again, Europe is by far the biggest culprit by already laying off 100,000 employees in 2022.

Even Europe’s banking jewel Credit Suisse is on the brink of collapsing and in need of a bailout.

Don’t tell your kid to get into banking, because they will most likely be feeding on scraps at that point.  

An interesting tech stock that integrates financial payments is Square (SQ) which has given back its entire pandemic performance.

As US interest rates are expected to peak and go down in 2023, I recommend dollar cost average into this stock at bargain basement prices.

 

THE LAST STAGE OF HUMAN-FACING BANK SERVICES IS NOW!

 

Dealing with the Cloud works, and for every relevant tech company, this division serves as the pipeline to the CEO position.

If this isn’t the case for a tech company, then there’s something egregiously wrong with them!

Take Andy Jassy - he is the mastermind behind Amazon’s (AMZN) lucrative cloud computing division and was the man who succeeded company founder Jeff Bezos.

He was rewarded this important position based on his performance in the cloud and faces a daunting proposition of following Bezos as CEO.  

Bezos incorporated Amazon almost 30 years ago.

Jassy developed a highly profitable and market-leading business, Amazon Web Services, that runs data centers serving a wide range of corporate computing needs.

Cloud 101

If you've been living under a rock the past few years, the cloud phenomenon hasn't passed you by and you still have time to cash in.

You want to hitch your wagon to cloud-based investments in any way, shape, or form.

Amazon leads the cloud industry it created.

It still maintains more than 30% of the cloud market. Microsoft would need to gain a lot of ground to even come close to this jewel of a business.

Amazon relies on AWS to underpin the rest of its businesses and that is why AWS contributes most of Amazon's total operating income.

Total revenue for just the AWS division would operate as a healthy stand-alone tech company if need be.

The future is about the cloud.

These days, the average investor probably hears about the cloud a dozen times a day.

If you work in Silicon Valley, you can quadruple that figure.

So, before we get deep into the weeds with this letter on cloud services, cloud fundamentals, cloud plays, and cloud Trade Alerts, let's get into the basics of what the cloud actually is.

Think of this as a cloud primer.

It's important to understand the cloud, both its strengths and limitations.

Giant companies that have it figured out, such as Salesforce (CRM) and Zscaler (ZS), are some of the fastest-growing companies in the world.

Understand the cloud and you will readily identify its bottlenecks and bulges that can lead to extreme investment opportunities. And that is where I come in.

Cloud storage refers to the online space where you can store data. It resides across multiple remote servers housed inside massive data centers all over the country, some as large as football fields, often in rural areas where land, labor, and electricity are cheap.

They are built using virtualization technology, which means that storage space spans across many different servers and multiple locations. If this sounds crazy, remember that the original Department of Defense packet-switching design was intended to make the system atomic bomb-proof.

As a user, you can access any single server at any one time anywhere in the world. These servers are owned, maintained, and operated by giant third-party companies such as Amazon, Microsoft, and Alphabet (GOOGL), which may or may not charge a fee for using them.

The most important features of cloud storage are:

1) It is a service provided by an external provider.

2) All data is stored outside your computer residing inside an in-house network.

3) A simple Internet connection will allow you to access your data at anytime from anywhere.

4) Because of all these features, sharing data with others is vastly easier, and you can even work with multiple people online at the same time, making it the perfect, collaborative vehicle for our globalized world.

Once you start using the cloud to store a company's data, the benefits are many.

No Maintenance

Many companies, regardless of their size, prefer to store data inside in-house servers and data centers.

However, these require constant 24-hour-a-day maintenance, so the company has to employ a large in-house IT staff to manage them - a costly proposition.

Thanks to cloud storage, businesses can save costs on maintenance since their servers are now the headache of third-party providers.

Instead, they can focus resources on the core aspects of their business where they can add the most value, without worrying about managing IT staff of prima donnas.

Greater Flexibility

Today's employees want to have a better work/life balance and this goal can be best achieved by letting them working remotely which effectively happened because of the public health situation. Increasingly, workers are bending their jobs to fit their lifestyles, and that is certainly the case here at Mad Hedge Fund Trader.

How else can I send off a Trade Alert while hanging from the face of a Swiss Alp?

Cloud storage services, such as Google Drive, offer exactly this kind of flexibility for employees.

With data stored online, it's easy for employees to log into a cloud portal, work on the data they need to, and then log off when they're done. This way a single project can be worked on by a global team, the work handed off from time zone to time zone until it's done.

It also makes them work more efficiently, saving money for penny-pinching entrepreneurs.

 

Better Collaboration and Communication

In today's business environment, it's common practice for employees to collaborate and communicate with co-workers located around the world.

For example, they may have to work on the same client proposal together or provide feedback on training documents. Cloud-based tools from DocuSign, Dropbox, and Google Drive make collaboration and document management a piece of cake.

These products, which all offer free entry-level versions, allow users to access the latest versions of any document so they can stay on top of real-time changes which can help businesses to better manage workflow, regardless of geographical location.

Data Protection

Another important reason to move to the cloud is for better protection of your data, especially in the event of a natural disaster. Hurricane Sandy wreaked havoc on local data centers in New York City, forcing many websites to shut down their operations for days.

And we haven’t talked about the ransomware attacks by Eastern Europeans on energy company Colonial Pipeline and meat producer JBS Foods.

The cloud simply routes traffic around problem areas as if, yes, they have just been destroyed by a nuclear attack.

It's best to move data to the cloud, to avoid such disruptions because there your data will be stored in multiple locations.

This redundancy makes it so that even if one area is affected, your operations don't have to capitulate, and data remains accessible no matter what happens. It's a system called deduplication.

Lower Overhead

The cloud can save businesses a lot of money.

By outsourcing data storage to cloud providers, businesses save on capital and maintenance costs, money that in turn can be used to expand the business. Setting up an in-house data center requires tens of thousands of dollars in investment, and that's not to mention the maintenance costs it carries.

Plus, considering the security, reduced lag, up-time and controlled environments that providers such as Amazon's AWS have, creating an in-house data center seems about as contemporary as a buggy whip, a corset, or a Model T.

The cloud is where you want to be.