The capital markets industry is in a sprint towards adopting generative AI, a technology that "replicates human capabilities as it can read, comprehend, reason, make suggestions, and create new content," according to @Matthew Long, senior managing director at Accenture. This fast-paced adoption isn't just a trend; it's a necessity. When applied to investment banking research divisions, the potential is revolutionary.
Your firm's proprietary historical research papers become the training ground for a generative AI model. Traders can then interact with this model using natural language, asking it to ideate and run hypothetical scenarios. The days of waiting on the quant team to churn out complex simulations are over. The value? Immediate, actionable insights are vital in an industry where let’s face it, every millisecond counts.
Alex Tedder, head of global and thematic equities at Schroders, adds fuel to the fire by estimating that "the annual addressable market (of Generative AI applications in capital markets) could be around $450bn, even on a conservative basis." With stakes this high, the early adopters are setting themselves up for a lion's share of a massive pie.
A few of the additional Gen AI Applications outside of research are:
- Customer Onboarding: Streamlining the 'know-your-customer' and due diligence processes, making them faster and more accurate.
- Operational Efficiency: Automating and 'bot-shoring' routine tasks, freeing up human resources for value-added activities.
- Regulatory Compliance: Automating the tracking of regulatory changes and adapting controls in real-time, significantly reducing compliance risks.
We're not just talking theory here; we're already knee-deep in projects to transform investment banking research through generative AI. Your firm's alpha isn't just about having stellar information and models—it's about the speed and precision in deploying that intel 🚀
If you're in Investment Banking and are being exposed to Generative AI, I'd love to know what your experience has been like.
