Terence Goh was schooled in the traditional banking sector in Asia. After starting his career in 1994 at DBS, he then spent seven years at Citi in Singapore before moving to OCBC as head of investments and structured products. More recently, Goh was a managing director at Standard Chartered in Hong Kong, leading the team that fosters collaboration between private bankers and investment bankers.
Since 2017, however, Goh has been at the helm of Binary Analytics Management (BAM), a Hong Kong-based start-up that aims to heap further pressure on a traditional banking job: equity research. “Equity research at banks has historically been cross subsidised by trading and IBD. But now, under Mifid II, research must be paid for,” says Goh. “The research industry now has to adapt to survive.”
BAM’s new way of providing research comes via a ‘robo analyst’ called RoboJean, which is launching next month. “Unlike robo advisors, which focus on portfolio allocation, it will replace some of the role of the equity analyst who writes equity research reports,” says Goh. “RoboJean 1.0 analyses a company’s financial results and price data to find undervalued stocks in an oversold situation to initiate buy calls. 2.0, which is under development, will incorporate machine learning capabilities. It will combine financial and non-financial data (such as weather data, satellite maps and sales data – anything that might impact a stock) to predict share prices.”
Goh says RoboJean can be trained to “be as good as a seasoned research analyst in less than 12 months”. “There might be 50 variables that affect a stock price. Through supervised machine learning, the system can work out a weighting for each variable and predict where the target price of a stock should be. It can take many years before a human analyst can predict the market with good accuracy.”
Research platforms that rely on human researchers – investment websites as well as banks – typically cover a small fraction of the equity markets, says Goh. “The need for manpower to write huge reports restricts them, so many only deal with blue-chip companies. Our focus is on scale. The development of big data and cloud computing over the past few years has now opened up the possibility to provide equity research for all listed stocks regardless of whether they are large cap, mid cap or small cap.”
Goh says the impact of technological innovation and regulatory reform on research roles at banks should serve as a warning to banking professionals in other functions who feel their jobs are under threat. “From my experience as an ex-MD, I know that senior managers at banks are always reviewing the costs of employing people. You should look at what you’re doing now. Is it repetitive? Can a machine do your job better and faster? If so, then at some point your managers will figure out a way for technology to take over. For example, regtech will one day displace many compliance positions.”
Learning a programming language now is one way to potentially beat the axe in the future, says Goh. “I’d encourage young banking professionals to add software coding to their resumes if they can. The hot languages like Python and R are particularly important within the financial sector.”
BAM has a team of three in Hong Kong and 10 in China. “We generally look for candidates who have financial knowledge and can also program – that’s not an easy combination of skills to find.”
The “local conditions” for launching a fintech firm in Hong Kong are much better now than they were just five years ago, says Goh. “There was little support from the regulator or government back in 2013; now there’s a lot. But never rely on government funding to cover your operating expenses. The approval process is long and tedious, and your start-up may run out of cash long before you see the government’s first dollar,” he adds. “Separately, customer acceptance of technology solutions in the investment sector is growing and cloud computing has driven down costs, making it possible for a company like us to start up.”
Have a confidential story, tip, or comment you’d like to share? Contact: smortlock@efinancialcareers.com
Related articles:
The nine best banking and tech jobs at Standard Chartered in Asia right nowStandard Chartered's hottest jobs in Singapore and Hong Kong are not where you might expect.
Hong Kong banks trying (but often failing) to hire from Google and AlibabaWork for Google? Banks in Hong Kong want to hire you.
I was a senior banker in Asia. I ended up flipping burgers in McDonald’sI started my career at Deutsche Bank…but years later I was shaking fries in a McDonald’s kitchen in Singapore. Here’s what happened to me.
Image credit: SasinParaksa, Getty