Will Investment Banking Be Automated


Private Banking Vs Investment Banking: Tabular Representation

What is Automated Investing?

The table below will further aid you in the differences between private and investment banking.

Private banking Investment banking
Private banking is a thorough wealth management service for high-net-worth clients. Investment banking is a form of financing given by a finance business or a banking unit to major multinational organizations. This entails assisting them with their investment strategies.
Customer dealings/transactions and services provided to HNWIs are usually kept private. This is impossible with investment banking.
This happens occasionally in private banking. It always conducts a comprehensive examination of the agreement and project that its customer is about to embark on to protect the clients money.
As a return for the enormous amount of business customers bring to the bank, a bank may provide HNWI reduced services. This is absent in investment banking.

Investment Banking Automations Future

Because they get tangled in their present structures, most banks have no idea how to automate business activities. However, they should include business automation in their banking investment.

This will improve client interaction and create a safe environment. This might take a long time, and its also a challenging and expensive procedure. However, to lessen market rivalry, they need to employ automation.

Robotic Processes will get used in the future. For the banking and finance industry, automation may be a worthwhile investment. It will minimize staff burden and time spent on physical labor.

The Next Generation Of Client

The building of client relationships must be insights-driven, relevance-led, and efficiency-focused. Consolidating client data in one place helps to create a sophisticated insight database. With a single client view, you can use relevant insights to speed up deal flow and win more mandates.

In a recent case, a Hong Kong bank that serves small and medium enterprises experienced significant gains through an end-to-end transformation of the commercial lending process. It reduced relationship management time by 20%, while quality customer appointments rose by 20%. Over 13 weeks, the four-week rolling average new loan sales increased 40%. Time-to-cash decreased by half.

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Automation In Banking And Financial Services: Streamlining The Reporting Process

The McKinsey report titled A Future that Works: Automation, Employment, and Productivity stated:”About 60% of occupations have at least 30% of their activities that are automatable.” Automation has become the focus of growing interest in the global banking and financial services industry. Many banks and financial companies are deploying the latest automation technologies for increased productivity, cost savings, and improvement in customer experiences.With AI-powered technologies like natural language generation, several repetitive, data-oriented tasks like report generation can be automated for swift results, while duly incorporating current regulations in the financial landscape. At vPhrase, our product Phrazor uses advanced natural language generation technology to augment and automate report writing and data analytics for enterprises. We have successfully deployed Phrazor technology to meet the requirements of diverse industries including banking and finance. Here is a closer look at some examples.

What Cannot Be Automated

Will Investment Banking Be Automated

While many operating procedures in mergers, acquisitions and investment banking can ultimately be automated, the majority of investment banking tasks still require a warm body andin most casesan incisive mind. Underestimating or, even worse, ignoring the human capital element of doing deals would be foolhardy. Many industry old-timers would argue the focus on technology in this market is not only wholly unnecessary, but a distraction from getting real work done. Those that understand the ability to use technology to both scale and clean existing standard operating procedures will see a massive influx of deals, but also be able to close more deals using less human intervention. In order to do so effectively, the systems need to be very dialed.

The writing is on the wall: margins in investment banking are decreasing and they will continue to marginalize. As they do, the most successful deal makers will be that way because they figured out a way to reach scale using humans + technology.

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Improving The Employee Experience

The reasons mentioned above, alongside their demanding workload, make junior bankers a natural fit for citizen development. Equipped with the ability to build automations for themselves , front-office teams across the industry are freeing themselves from thousands of hours previously spent on:

  • Sending weekly trading updates: robots create client reports with charts and trading data extracted from providers like FactSet and CapIQ and send draft copies to analysts for sign-off before sending to clients.

  • Preparing pitch books for client meetings: robots help build Microsoft PowerPoint presentations by adding dates and titles, updating comparable company metrics, pulling in market performance charts, and other relevant deal data points.

  • Sending trading comps to clients: robots extract relevant comps data from third-party data providers, format data, and attach the data to client presentations for analyst sign-off before sending.

  • Creating public information books : robots pull company filings, press releases, research, and news articles from multiple sources and combine into a single PDF document.

  • Compiling working group lists: robots navigate across multiple applications to gather all relevant client information and input into a formatted document to be shared with the team.

  • Formatting earnings models: robots work across multiple Microsoft Excel worksheets to transfer data from prior quarters into the current quarters data in preparation of earnings releases.

% Of Daily Work Was Outside Core It Systems Not Monitored Recorded Systematically Understood Or Quantified

These parallel communications channels created enormous amounts of excess work. The bank needed to understand the workflows in order to automate inputs and initial processes, then feed the RPA engine and other applications with labeled, structured data. The bank engaged Re:infer, a SaaS-based natural language processing technology platform to interpret raw communications data and apply machine learning to identify relevant data clusters. A cluster is a semantic group of conversations. Staff then reviewed the clustered conversations and taught the model how to interpret them. Data was systematically labeled using a customised taxonomy. The models and platform were then connected to multiple incoming communications channels email, chat application programming interface , call transcripts, customer relationship management systems to analyse recurring themes and deliver structured data to downstream users and systems, including the connected-RPA enterprise platform.

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Trends: The Impact Of Technology On Investment Banking

Hot on the heels of the COVID-19 pandemic, 2021 saw the biggest deal surge in investment banking history. In fewer than 12 months, the market transformed first into no-manâs-land and then into the promised land. Firms went from too much time on their hands to too many deals on their hands. The adoption of technology by the investment banking industry has historically been slower than other technology-savvy markets. But unmatched competition and unexpected changes over the last two years have caused more banks to begin embracing digital transformation to fuel smarter decision making, accelerate processes, and scale operaitons. Our research shows that digitally mature dealmakers with sophisticated use of data and technology transact 3.5x more frequently and generate IRR 8.8 percentage points higher than their peers. And while no one can foresee exactly what 2022 will bring, weâre confident that leading investment banks will continue to harness the latest tech tools and processes to meet new challenges and opportunities head-on.

Letâs dive into 5 recent technology trends and how theyâll impact the way investment banks find and close deals in 2022:

  • SaaS Sales Models
  • Wells Fargo Predicts That Robots Will Steal 200000 Banking Jobs Within The Next 10 Years

    More to lose jobs as banks embrace agency banking and automated systems

    A customer uses an automatic teller machine inside a Wells Fargo & Co. bank branch in New … York, U.S., on Tuesday, Jan. 9, 2018. Photographer: Daniel Tepper/Bloomberg

    According to a Wells Fargo research report, robots will eliminate 200,000 jobs in the banking industry within the next 10 years.

    These numbers seem astounding and mind-boggling. However, the robot overhaul has been in motion for some time. While others use the term robots, it’s fair to say that this also refers to artificial intelligence, advanced technology and sophisticated software.

    Like many business sectors, banks are under siege from a confluence of factors working against them. The current trend of low and negative interest rates is an anathema to their business model. When rates are too low, the banks margins are squeezed so tight that it’s hard for them to turn a profit. Lending is the cash-cow division for most banks. When this area is under pressure, it doesnt bode well for the bottom line.

    Banks are worried about a myriad of other factors, including how the decade-long stock market surge will endin a mild recession or something far worse. Fears of a possible recession may curtail future business. Trade and tariff wars, nasty politics, Brexit, climate control, FinTech disruptors, low trading volumes, a recent poor slate of controversial IPOs and geopolitical uncertainty and tensions all take their toll.

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    How To Start The Business Automation Process

    There is a lot of business automation process available, and among them, Artificial Intelligence or AI, machine learning, and Robotic Process Automation or RPA are some of the technologies that are used in investment banking. In banking, we can find a lot of business process automation examples such as trade financing, customer on-boarding, bank reconciliation process, the loan application process, automated report generating process, account closure, credit card application processing, and so on.

    Before implementing the automation process in the banking firm, the industry should know the benefits

    Tracking And Measuring Conversational Flows Resulting In Insight Into Risks Duplication Misunderstandings And Process Inefficiencies Further Leading To Changes In Workflow

    Example: a UK bank

    Lets look at another capital markets application, this time in a major UK bank. The applications have been similar to those described above. What is interesting is how innovation was sourced in the business. In the Swiss bank, the CA initiative was championed mainly by senior operations executives. The UK bank saw the championship come from technology and operations executives, able to get buy-in from a broader range of stakeholders. The initial problem revolved around process inefficiencies. For example, onboarding new clients and funds created considerable friction between front and back office. The chief technology officer wished to make a business case for workflow technology, but automation providers were also invited to look at the communications processes.

    The POC involved applying the vendors automation suite to communications data in three known problem areas fixed income confirmations, platform operations, and client onboarding. The POC was successful, and it became obvious that these cognitive technologies gave the bank the ability to actually reorder how trades and transactions were processed in a much more streamlined pipeline across the organisation.

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    How Can You Get Started With Automation In Investment Banking

    In investment banking, there are several automation processes. Artificial Intelligence , machine learning, and Robotic Automation Systems are just a few. These are also some of the most cutting-edge technologies in investment banking.

    Many examples of business process automation can get found in banking. Trade financing, customer onboarding, the bank reconciliation process, and the loan application process are examples of this.

    This is in addition to the automated report generation, account closure, and credit card application processing, among other things.

    Could Coding Be Part Of The Answer

    Avaloq Partners With Investsuite to Bring Automated Investment ...

    Many banks have been demanding coding skills from recruits for some years, but those skills may be under-utilised: just 28 percent of juniors say they code frequently at work. Thats below the industry average and compares with 44 percent of buy-side analysts surveyed.

    However, the research shows that many banks are on the verge of moving to next-generation workflows.

    Seniors are convinced of the potential: 60 percent say that greater use of coding will improve revenue generation, while 87 percent of those already using coding to formulate pitches articulate this to clients, either to show the depth and breadth of modelling that went into their thinking, or to gain an edge on the competition.

    To find out how investment bankers can leverage new ways of working with data to improve speed and accuracy, impress clients and win mandates, .

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    How The Automation Processes Shape Investment Banking

    If you are still confused about why automation is important in banking investment, then the toughest job in banking is the collection of data and processing. The banking system should know to capture the data, and also they should know what to do with the data. If the banking investment doesnt have any automation process, then it will be left behind.

    So, every banking investment industry should know the business process automation benefits, as it will improve the efficiency and also it will make the data collection job simple and easier. There is also false news that automation will take the role of bankers in the future, but one should understand that even after the invention of excel, still there are companies who are following handmade spreadsheets. So, this kind of business automation process will increase the bankers skills and help them to bring new ideas. We should never forget that human skills are irreplaceable.

    Learn More Recent Trends In The Investment Banking Industry

    Investment banking has traditionally been among the last industries to adopt new technologies. But the need to innovate in the face of historical market disruption and competition, combined with research highlighting the success of digitally mature dealmakers, is leading more investment banks to embrace digital transformation. We believe that these five trends are just the start of the impact of technology on the investment banking industry in 2022. To learn more about how data and digital transformation are changing the way banks find and close deals, read this free guide, Think and Grow Different: Dealmaking Strategies for Investment Banks.

    What’s next?

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    Digital Transformation Will Lean Into Personalization And Automation

    Artificial intelligence is a necessity for a flexible, proactive digital system. AI helps integrate personalized data and automate tasks. Yet, there is a balancing act between personalization and automation. Challenges range from siloed information to process changes, excluding the human or compliance factor. One of the main issues is the integration of functional teams and data. Integrating functional teams and their processes, tools, and timelines requires a collective effort. This coordination can be challenging in the beginning phases.

    Changing regulations slow innovation and is a risk to investment banks reputations.

    Integrating data from many different systems raises compatibility issues. Sometimes these issues need modern applications to solve them. Another issue is compliance and regulation. Developing new systems will raise compliance-related questions. This is an ongoing issue as there were $10 billion in compliance fines issued between October 2018-December 2019. Yet changing regulations slow innovation and is a risk to investment banks reputations.

    Compounding Results From Small Automation Opportunities

    Automated Investor: Easy investing. Explained in 39 sec.

    Below, we run through three small examples of repetitive tasks that can be automated in KNIME Analytics Platform, a low-code data analysis tool. While alone, these may seem small, youll quickly get a sense of how these can serve as gateways to much more advanced automation capabilities.

    Youll likely start with automating tasks that are obviously repetitive , but youll soon find more complex tasks that can be automated. For instance, you might notice that each time you go to update the corporate model, you take data from the same columns, check for the same missing values, and ultimately add and subtract the same values to confirm the accuracy of the incoming information. From there, you might start setting up rule based automation that will run upon import and alert you if things go awry.

    Data Collecting:

    Often the output of your work is the result of combining source files downloaded from different systems and then copy-pasting the results in template files.

    The simple task of combining data from different sources can be much more simply handled with low-code, whether you have two sources…

    …five sources

    …or 200 sources. Once youve reached out to all the files that you have to work with, you can perform any data cleaning task youd like, including all the capabilities typically available in Excel .

    Data Cleaning: Making Sense of Received Corporate Models

    Model Maintenance: Keeping Financial Data Up-To-Date

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    Will Investment Banking Be Automated

    Will investment banking be automated? If youre one of the people who often ask this question, this article will benefit you. Society is shifting toward digital processes, and almost all of them are becoming automated. We can see how software consumes the entire world and how business automation systems infiltrate the banking and finance industries.

    As a result, everyone is wondering if investment banking will get automated. Come along as we highlight this possibility.

    What Is The Process Of Investment Banking

    Investment banks provide investment banking services by acting as middlemen between companies and investors. It mainly deals with stock exchanges and shares.

    The investment banking profession aids significant firms and organizations develop and executing a successful investment plans. This necessitates the accurate pricing of financial instruments. An investment bank acquires most of the shares on behalf of a company in an IPO .

    The investment bank sells these shares on the market, which acts as a proxy for the firm. Investment bank boosts the companys revenue while also adhering to all legal requirements.

    The investment bank usually gains by marking up the initial price of shares. This is valid when selling them to investors. This is in addition to supporting the corporation in generating the maximum profit feasible from this activity.

    If the stock gets sold at a cheaper rate, the investment bank may lose money. If a market circumstance arises in which the stock becomes expensive, this is true.

    Before enlisting the help of an investment banker, a company should assess its needs and weigh all of its options. Before approaching an investment bank, the company must consider several essential factors.

    These factors include the quantity of money getting raised and market competition. Once the organization has a firm grasp on these issues, it may employ the help of an investment banker to locate new businesses to finance.

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