Digital transformation, long emerging, has already officially arrived in investment banking. Driving this transformation is the power of data analytics, giving institutions more information and insight (and doing it more quickly and intelligently) than ever before.
Data analytics in investment banking is a result of a rigid conjuncture that led to weak returns compared to older times. In the last few years, the financial sector and capital markets have witnessed a few years of stagnation of revenues provided to the fall of margins and the growing complexity of regulations.
Across industries and around the globe, automation technology tools continue to emerge with new capabilities for streamlining processes, eliminating potential human error, and increasing overall efficiency for organisations. Still, many companies don’t fully embrace it, investment banks included.
With digital transformation in banking has come an increase in regulations and governance, creating increased accountability for investment banks in the ways they collect, analyse, share, and report their data.
Client expectations have evolved alongside digital transformation. While financial services industries have been somewhat notoriously known for digital resistance (especially in a pre-COVID era), clients have long been demanding experiences that align with those offered by the consumer brands they interact with.
The pandemic eliminated any resistance banks may have wanted to maintain to offer a fully digital experience. In 2020, banks were forced to move operations and core client communications fully online, things previously deemed impossible not to do without at least some true face-to-face interaction.
For banks to take advantage of the many benefits digital transformation and big data have to offer, the migration of that data to a centralized location will be absolutely necessary. Beyond a centralized location, ground breaking Artificial Intelligence technology has been built to understand financial language and allow analysts to move faster.
Artificial intelligence and the transformative impact is having in the financial services industry across a wide range of operational and strategic areas — mainly, data analytics. For investment banks, these solutions and others like them, mean faster and more secure sharing of market data, smarter portfolio management, and better client services.
In the future, technologists who can turn technological architecture and tools into more-attractive customer propositions and foundations for investment banks to reach faster decisions will join traders and salespeople as the highest-paid people in investment banks. Technology specialists will play a greater role in allocating investments, working alongside senior management from a more traditional background, who currently drive much of the decision making but have limited technological expertise.
Investment banks will automate manual tasks and processes to increase efficiency, move services to the cloud, and improve the quality of data analysis, in part by using artificial intelligence to better anticipate evolving customer needs.
Analysts and associates can eliminate redundant research and save their firms annually on wasted research-related costs. With the cost of research high and the underlying process slow, banks can increase their efficiency through an emphasis on data analytics, resulting in happier clients, stronger real-time decision-making, and more meaningful insight extraction.
In reality, investment banks have an opportunity to shift this perspective by looking for ways to create collective intelligence and increase their strategic responsibility as previously time-consuming processes become automated, allowing for a focus on more high-value work.
Investment banks assist large, corporate clients across the globe on a myriad of complex financial transactions, meaning they need to possess analytics capabilities to stay ahead of more quickly evolving client expectations and behavior.
Bankers often grapple with low confidence in the completeness of data. Finding that esoteric company information is just as important as knowing when it cannot be found. Hours are often wasted looking through sources and resource platforms to ensure they’ve covered all their bases. Investment banks with their finger on the pulse of this trend, then, will amplify their analysts to glean real-time insights, create higher quality work, and strengthen their client.
