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New Hybrid Workforce in Investment Banking

Published on July 23, 2018 by Rohit Makker

Technology has grounded its feet in most industries and investment banking is no exception. Project management technologies are an absolute necessity given the dynamic nature of the industry. Automated financial data extractors, financial model builders, benchmarking tools, analysis dashboards and visualization tools for the various processes inherent in investment banking not only help save time, but also help streamline complex problems for deal makers.

Incontrovertibly, the integration of facets of Artificial Intelligence (AI) such as automation processes in investment banking (IB) will have a long lasting and beneficial impact for the industry. Automation increases efficiency and reduces costs by allowing analysts to make complex financial decisions with the click of a button. Instead of being assisted by many hands and minds, a single tool is capable of offering data to support both pre- and post-deal-making decisions, generated by a thorough analysis of age-old historical data and the intelligent assimilation of emerging trends. Augmented decision making capabilities aided by the use of AI will be critical for the industry as financial products become more and more complex.

The IB industry is betting big on AI and automation. Banks such as JPMorgan are investing on technology as they look to trim costs and increase efficiency. The bank has launched a predictive recommendations engine by implementing machine learning in IB to identify clients best positioned for follow-on equity offerings, through automated analysis of current financial positions, market conditions and historical data.

Financial institutions such as Deutsche Bank and Credit Suisse also plan to implement more AI in different processes. According to Greenwich Associates, by the end of 2018 some 75% of financial firms will either explore or implement AI technologies. The industry is embracing technology with open arms and we can say that a hybrid workforce, part machine and part human, is here to stay.

So finally, the big question: will advancing technology soon disrupt investment banking too?

Well the answer can be yes and no.

Investment Banking is a practice that will always be built on relationships, especially at the senior level, and automation will never be able to completely replace the traditional human ways of conducting business. But, unquestionably, AI will be critical in the future of IB. As the routine ground work of analysts gets taken over by intelligent automated tools, bankers will need to upgrade their skills and get accustomed to work with machine intelligence.

According to a study by Accenture, automation and machines could be able to take on as much as 30% of the current workload, leaving bankers with free capacity to take on more value-added work such as client relationship building, providing insightful solutions, and moving up the overall value chain.

The most efficient and successful bankers will be those who not only understand automation but are fully embracing it and using it to assist them with mundane tasks associated with their strategic roles.

With the right relationship with AI, the new technological revolution will free up human creativity that may lead to greater opportunities and quality service offerings, and thus have a constructive impact on the industry and the overall society.

At Acuity Knowledge Partners, we recognize automation as a key driver for the future of global Investment Banking. Our proprietary automation suite called BEAT (Business Excellence and Automation Tools) enables IB analytics and research teams to automate standard and repetitive processes to generate greater efficiency and productivity.

Sources:

https://www.accenture.com/in-en/insight-investment-bank-challenge-03-automation-intelligence

https://www.cognizant.com/FoW/twa-banking-and-financial-services-codex2320.pdf

http://www.wipro.com/documents/Robotics-Taking-Automation-to-the-Next-Level-in-Capital-Markets.pdf

https://investmentbank.com/automation-in-investment-banking/

https://news.efinancialcareers.com/uk-en/282648/automation-of-investment-banking-jobs

https://qz.com/1144076/credit-suisses-ceo-plans-to-implement-more-robots-at-the-bank/

http://www.businessinsider.com/jpmorgan-using-machine-learning-in-investment-banking-2017-4

https://www.nanalyze.com/2017/02/artificial-intelligence-investment-banking/


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About the Author

Senior Associate, Investment Banking

Rohit Makker has over 5 years of experience in consulting and research. He currently provides Food and Agriculture research and analysis support to a leading European Bank.

Prior to joining Acuity Knowledge Partners, he was associated with Netscribes where he worked on market sizing, customer satisfaction and industry analysis on consumer goods, food and agriculture sector.

He holds an MBA - Marketing from ITM Mumbai and Bachelors in Business Administration from Devi Ahilya Vishwavidyalya, Indore.

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