The Downturn Is Forcing Bankers To Do More With Less… Can AI Pick-up Some Of The Slack?

By Jim McVeigh, founder and CEO, Cyndx

With rising interest rates and an increasingly difficult economic environment, more and more companies are experiencing layoffs. The banking sector is no different with layoffs continuing to be announced at some of Wall Street’s biggest banks. At the same time, deal activity remains elevated, and we are seeing a big pickup in mergers & acquisitions, despite a drop in venture capital funding. This dynamic is forcing those who remain in their roles to figure out how to do more work with fewer resources in a compressed amount of time.

So how are bankers navigating this new normal? Many are increasingly investing in technology to save time, deliver high-quality results, and increase the probability of successfully completing their deals.

Manually going through personal networks to gain intel and evaluate investment opportunities is a long-standing practice, but incredibly time intensive. Transactions are also becoming increasingly global as companies seek to enter new markets and source capital from international investors. What we are seeing is that as digitization increases access to global corporate data, the financial services industry has embraced new technologies like the cloud and AI to evaluate investment opportunities more efficiently.

The use of AI has become attractive for those in the financial services industry as bankers try to use these new technologies to quickly obtain unique insights. Properly trained AI increases the amount of data that investors can analyze, and helps investors identify or recognize where new companies and innovations are emerging. Combined with NLP, this technology allows investors to make more informed decisions or better identify investment opportunities. A big change from picking up the phone and working your way through your contacts or using Google to try and find the right people to speak with.

Research that would normally take months of manual labor can now be done in seconds. Investors can look at multiple factors and understand the influence they have on one another when making a potential investment decision. Information including an executive’s work history, the number of patents filed (and who owns that intellectual property), acceleration of capital into a particular space, lines of business that are supported, education of the founding team, and the experience of the investment partners are all now readily available. 

With the use of technology, investors are more easily gaining a full 360-degree perspective on a company's associations and its competitive landscape, and AI can bring in brand new datasets that provide a deeper and instantaneous picture of a company or industry ecosystem. This approach goes beyond the standard classification and uncovers - through dynamic mapping - the most relevant concepts associated with any one company, even for extremely niche sectors. With today’s technology, investors can now uncover unique opportunities in a record amount of time and can maintain a consistent deal flow. 

In addition to bankers working to identify and facilitate deals, company owners and executives are also benefiting from the influx of data and utilization of new technologies. AI helps them find the right strategic partners who can best support their goals and growth. 

Similar to conducting research on a potential deal, finding the most attractive business opportunity, and conducting the appropriate level of due diligence has traditionally been a highly manual and time-consuming process for busy entrepreneurs. Companies haven’t always had access to the relevant information necessary to make the right decision. Historically this data has been opaque at best, and more commonly, completely unavailable. Today, AI and NLP tools help provide greater visibility into the private market, improve the discovery of acquisition targets, and reduce the time spent evaluating a business opportunity. 

However, the influx of data, despite the new powerful AI tools to help navigate it, does pose a challenge for businesses and investors alike as they try to glean insights and gain a competitive advantage from all of the new and existing data. Nothing good in life comes easy. But with proper training on how to effectively access and interpret this data, the benefits can be very powerful and quickly realized.

Advancements in AI have the ability to simplify investors and entrepreneurs’ deal sourcing and investment strategies with tools that can quickly identify and access the right companies or investors. At the same time, AI is helping bankers do more with fewer resources – paving the way for more efficiency. Consequently, this is also creating the opportunity for greater efficiency within the private markets, while reducing the risks over time.