The Growing Role of Technology in Investment Banking
Technology is radically changing banking operations. Today, players in the investment banking industry have no option but to adopt and integrate emerging technology. Technology will determine investment banking processes and the regulatory environment in the coming years. There are several ways in which technology is transforming the investment banking landscape.
As technological innovations continue to create more value for consumers and banking institutions, technology companies are not just getting bigger but owning more in hardware and software. For example, artificial intelligence (AI) and other forms of automation such as machine learning (ML) are significantly impacting the investment banking sector through advanced algorithmic decision-making processes.
AI and ML solutions are working hand in hand with data visualization and analytics. These tools are helping investment bankers and robo advisors to leverage big data to ascertain critical market aspects such as entry and exit signals.
Automation will boost operational capacity and allow bank employees more time to focus on higher-value projects and clients. Today, most banks have deployed cutting-edge automation technologies to deliver improved customer experiences, save cost savings, and enhance productivity.
Technology is not just disrupting the investment industry, but today, most traditional finance activities are being completed more quickly and efficiently, with minimal human intervention. This has freed up banking staff to focus on using the data and analytics more efficiently and gain better insights on different business aspects, such as charting new revenue streams or new sources of growth.
Technology has changed client preferences and thus generated new ways of channeling and receiving information. Banks need to ensure that the information gets to the clients conveniently, quickly, and securely to dispel information tampering and hijacking fears.
Thankfully, technology has made that possible through secure, user-friendly, and interactive portals. In addition, investment banks are leveraging content-rich multi-channel to reach more diverse clients and users. The benefit is that service delivery improves, as does the client experience.
Like most other industries, investment banking has also embraced mobile. Many blue-chip investment banks are now offering a broad range of services through mobile apps. The adoption of mobile digital technology has reduced costs for many banking and financial institutions as they can cut back on staff deployment. For the client, it means more convenience and superior user experience.
Mobile apps and digital platforms facilitate real-time market data, the latest market intelligence, interactive analyst insights, industry reports, and customized client dashboards that allow direct interaction with their banks. With more and more application programming interfaces (APIs) being developed, investment banks are not only keeping tabs on the latest tech developments but also ensuring they are in constant and personalized contact with their clients.
Blockchain technology is also having its mark on investment banking. Although the technology has been around for a while now, it’s only in recent years that investment banks have woken up to the value its adds to their services. A decentralized global system, blockchain creates and validates person-to-person transactions without having to go through a centralized process such as offered by a central bank.
Blockchain technology enhances trading security, eliminates fraud, cuts out commissions, and increases the transaction’s speed. Currently, the effects of blockchain technology in investment banking are felt strongly on the trading side of business. This is because standard regulatory reporting requirements and reconciliation processes can be costly and time-consuming.
