AI and Investment Banking

10/20/24, 10:22 PM AI and investment banking: EBSCOhost
AI and investment banking.

Authors: Stewart, Jackie
Source: American Banker Magazine. Jan/Feb2024, Vol. 134 Issue 1, p36-36. 1p.
Document Type: Article
Full Text Word 644

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ISSN: 2162-3198
Accession Number: 175404603
AI and investment banking

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Investment banking is one profession within the financial services industry that is salivating at the
chance to use generative artificial intelligence to lighten the workload.
The field has been using AI for certain tasks for years. But now, large language models have gained
popularity and could simplify arduous tasks, such as processing large swaths of legal documents that
are ubiquitous in investment banking.
"It's about accelerating tasks," said Larry Lerner, a partner at McKinsey who advises financial institutions
on advanced analytics and data transformations. "That's really across many functions that are
information intensive. Think legal and compliance, customer service and technology" as these are areas
within investment banking which could be transformed.
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McKinsey research has estimated that different types of AI and analytics could generate $29 billion of
value for capital markets and investment banking.
"Banks are slowly and carefully rolling out these products to their analysts," said Sourish Sarkar, senior
director of solutions architecture at Moody's Analytics. "It's efficiency gains. Over the next few months
and years, everyone will be looking at how their analysts, relationship managers and other key players
can become more efficient."
Sarkar used the example of an investment bank interested in fulfilling requirements for an
environmental, social and governance investment. Currently, an employee needs to read over
compliance forms and complete the necessary paperwork. But in the future, this work could be
completed with assistance from a large language model. This same generative AI technology could also
help that same employee by reviewing pages of compliance and legal documents and distilling down the
necessary information. This same idea can then be applied to any legal, regulatory or compliance task
at an investment bank.
Other mundane tasks that could benefit from the help of AI are the pitch books investment bankers use
to sell clients on a potential deal, said Ed Rasmussen, managing director of global financial and
professional services at Williams Lea. For instance, a standard slide within these presentations is listing
the last two dozen or so deals completed along with each company's logo. It can take an analyst hours
to find the necessary logos, make sure the art is usable and insert the image into the pitch book,
Rasmussen said. But Rasmussen's firm now utilizes an AI-based search platform that can complete this
task. "It's clean and crisp. It's done through an automated process, creating efficiency tools," he added.
That will likely mean that the responsibilities of junior investment bankers and analysts will transform
from "repetition, manual or difficult tasks into jobs that are more reflection, more analysis," said Bruno
Campenon, head of bank, brokers and corporates at BNP Paribas' Securities Services business. That
will require different skill sets than these employees may have needed in the past. But given that
younger generations grow up utilizing the latest technology, this likely won't be a barrier to employment.
It also won't particularly mean a reduction in headcounts.
"I think the best way to answer [the question of staff reductions] is to look at the past. When IT arrived,
the exact same question about jobs disappearing was asked. There was this assumption that so many
jobs would be killed," Campenon said. "But the answer is clearly no, that didn't happen."
Piper Sandier is considering how to use AI to become more efficient, said David Sandier, co-head of
investment banking in the financial services group. He said that the firm has always tried to be open to
technology and was one of the first to embrace software to help with asset liability management. In
terms of AI, Piper Sandier is "working with certain partners to design some productive use cases around
AI. We have an oar in the water. I think AI will be positively transformational for us but also for the
industry at large," Sandier added.
~~~~~~~~
By Jackie Stewart
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10/20/24, 10:22 PM AI and investment banking: EBSCOhost

AI and investment banking.

Document Type: Article

Full Text Word 644

Accession Number: 175404603

EBSCO Connect Privacy Policy A/B Testing Terms of Use Copyright

Cookie Policy Manage my Cookies

© 2024 EBSCO Industries, Inc. All rights reserved.

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