firms with Automation

The Official Blog of Acuity Knowledge Partners

Creating Competitive Advantage for sell-side firms with Automation

Published on November 3, 2017 by Rohan Fernando

Financial pressures on sell-side firms are on the increase—whether it is the ongoing debate on active versus passive money management and if it is worth paying a premium for the former, or MIFID II regulations that are changing the sell-side landscape with the unbundling of brokerage commissions and research; firms are also facing increasing costs of complying with the MIFID guidelines. Thus, cost and process optimization have now become critical for their survival.

Sell-side firms have been pursuing various strategies, and some of them have even closed down certain functions to optimize their processes. The real solution will emerge when they are able to optimize the current process to reduce costs or provide a better service at the same cost. Outsourcing a part of their jobs is definitely a solution, one that they have been deploying over the years. However, with many firms applying the same strategy, this is not a differentiating factor over competition anymore.

This is where automation can make a difference. The sell-side can now also consider automating a lot of processes and workflows to cut costs further. These tasks include regular routine work, such as extracting data from various sources to update a financial model or creating charts for a new report or more complex tasks, such as…. As the broader technology world has already started reducing human intervention with artificial intelligence, we believe a lot of tasks in the financial world can be automated and move in the same direction.

Emerging technologies have now simplified automation to a great extent. There are various tools that can perform most of the workflows in a smooth manner. Most routine processes in an investment bank or a similar organization should be automated over time, except where human intervention is vital—such as analyst-level sales functions that involve meeting clients and clinching deals. While the initial capital to launch an automation drive may be higher as it requires significant investments in premium technology, experience, and skills, but once established, it would result in significant cost savings for banks.

An automated work environment will also let top-level analysts utilize their time more effectively, as it removes the need for supervision. Also, an automated system can be more productive. For instance, the time taken by an analyst to capture news, based on key words, will be much more than what it takes for a computer to extract news. Similarly, analysts will be able to expand their source-data capturing in an automated environment as the system has the capacity to process more information. For example, an analyst can track a maximum of two news sources at a time, while the computer could track any number of sources. Also, the computer can extract news and information using semantic analysis and can even add judgment to it within a few minutes.

Functions that can be efficiently automated in investment research include processes such as data collection and data extraction. Most junior analysts typically work on excel and PDF files to convert raw financial information into more acceptable structured data tables. This has a pre-defined pattern, where analysts open raw source files and extract data from pre-defined locations. Such tasks can be automated easily.

It is time for sell-side firms to rethink their strategies and move toward automation. However, automation is not as simple as it sounds, as it requires specialized skills and expertise. Automation engineers need both sound domain and technical knowledge to be able to automate tasks efficiently; they should be able to communicate effectively with analysts for a productive deployment of the technology.

We believe automation is a change that everyone will need to embrace over time —while it might replace human intervention, the flip side is that it will enable them to focus on more important responsibilities.

What's your view?
captcha code
Thank you for sharing your Comments

Share this on

About the Author

Rohan helps Acuity Knowledge Partners Colombo identify technologies and involve in-system designing and implementation. He has over 9 years of experience in software development covering multiple domains with a special passion towards the capital markets domain. Previously, Rohan worked at Virtusa Pvt Ltd. and James Finlays.

Rohan holds a Master of Science in Enterprise Application Development from Sheffield Hallam University, a Bachelor of Science (Hons) in Information Technology from Middlesex University and is pursuing a PhD in Information Technology at Management and Science University, Malaysia.

 post image 2 Blog
Advantages of having a remote executive assistan....

“They’re troubleshooters, translators, help desk attendants, diplomats, human database....Read More

 post image 2 Blog
The impact of artificial intelligence on finance....

We have witnessed an unprecedented phenomenon in recent years – the growing presence o....Read More

 post image 2 Blog
The future is in green and ESG deals....

The ESG market was set for a great start to 2022, with high expectations of crossing the h....Read More

 post image 2 Blog
Empathy is the ultimate metric: Our Colombo d

Human beings are an adaptable species. It is what makes us stand out among this planet’s....Read More

 post image 2 Blog
Does your interactive report solution highlig

Everybody talks about interactive reports and everyone wants to develop and implement them....Read More

 post image 2 Blog
Interactive, user-customisable reports – An

Investment research plays a critical role in the capital markets sphere, providing high-qu....Read More

Like the way we think?

Next time we post something new, we'll send it to your inbox