Automated Business Processes at Investment Banks


The most notable companies in the world are pivoting their business to artificial intelligence and automation. As automation continues to soar, organizations are benefitting at various levels, including increased productivity and customer satisfaction. Investment bankers have not been left behind the bandwagon as the industry continues to automate more of its practices.

More than ever, finance professionals are working with different computers and machines. Shrewd and time-oriented bankers are the ones who fathom the significance of automation that is in the offing. These bankers not only understand the importance of automation, but a good number are embracing it and utilizing the technology with different tasks involved in investment banking.

What can be Automated?
It goes without saying that investment bankers are financial officers. Yet, their tactics for closing deals are nothing short of effective marketing. Arguably, the best investment bankers are about 80% sales and 20% finance. They are sales personnel who wear financial attire, as witnessed in New York investment banks.
Typically, investment bankers spend their time selling securities from their clients as “the best” or selling themselves as the most proficient banker of choice. In selling securities and bagging new clients, there are many tasks in between where investment banking automation applies. For instance, there are deal origination and marketing processes that an engine can automate.
Investment bankers can also streamline problems using time and task management tools. A project management software constructed explicitly for investment bankers will be handy in such an area. Bankers will apply the software for complex Gantt charts for a myriad of the processes involved in investment banking. They can also make specific tasks not slip through the cracks. Additionally, project management reinforces accountability.

What can’t be Automated?

Many procedures in acquisitions, mergers, and investment banking can be automated. However, the majority of investment banking procedures and tasks require humans with an intelligent mind to conduct them. When running investment banking deals, it would be irrational to overrule or underestimate the human element.

Many industry old-timers believe that focusing on technology when it comes to investment banking may be unnecessary. They argue that technology distracts from getting the needed work done.

Bankers who understand the ability to utilize technology to clean and scale the existing operating standard will ultimately get more deals. Not only will they have an influx of contracts but also close them with dismal human intervention. However, the systems need to be dialed to close the deals effectively.

It is worth noting that margins in investment banking are plummeting and will continue to do so. As the margins keep dropping, the most successful bankers will be those who will learn to utilize their marketing skills and new technology.

How can Automation Solve Real Investment Banking Problems?

Automated intelligence in investment banking can be used to solve real problems. Below are some of the issues you can alleviate by using automated processes.

1.      Automating Securities Underwriting

Underwriting is a vital part of investment banking. The process thoroughly involves reviewing many financial documents to assess market risks. Most papers are unstructured, making underwriting a process excellent for automation.

2.      Meet the LIBOR Challenge

The LIBOR interest rate has been scrapped, and banks need to change terms with loans that reference the LIBOR. Bankers must get the loans before reviewing them to find the words that need to be updated. The task is laborious for humans, but intelligent document processing efficiently handles the matter.

3.      Equities Research

Investment banks provide equity research to assist clients in making the best financial decisions. A security analyst goes through reports as they try to understand a company’s financial position. An automated system can easily handle the job for them.

4.      Money Laundering Compliances

Investment banks must comply with different government regulations to detect money laundering. The banks have to collect dozens of documents to prove they are genuine. The process is long, but with programs meant for anti-money laundering, the process is easily automated.

5.      Processing ISDA Master Agreements

You need to examine the ISDA Master Agreement, which defines the terms between two parties in the trade when processing over-the-counter derivatives transactions. It is a tedious task given that the ISDA is 28 pages and is a template, as different variables apply to each transaction. A human can take up to 2 hours to process one, and banks process hundreds of thousands annually. This process is, therefore, ripe for an automated process.

Wrapping Up

Most companies and industries will continue implementing automated processes. However, thinking that automation will completely phase away the need for humans in investment banking or other sectors is a great misconception. In most cases, companies automate mundane processes that are repetitive and that employees will easily let go of.

According to recent research, only 5% of present occupations can be fully automated with the current technologies. The study indicates that 30% of activities in 60% of fields will be automated. So, you do not have to worry about losing your job the next day. Automation only means you will have more valuable time to do profitable work.

Like it? Share with your friends!