Best use cases of AI in Investment Banking
Hey folks,
Been mulling over something lately and thought I'd throw it out here for some real talk. We all know AI's been making some serious waves. But I'm curious about how it's really playing out in our own backyard - investment banking workflows
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AI in Action: So, what's the scoop? Anyone here actually using AI in their daily grind? Maybe for crunching numbers, assessing risks, or summarising reports?
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AI to the Rescue: We've all got those pesky challenges that slow us down. Any you reckon AI could tackle?
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Paying for AI: Here's the million-dollar question - would you shell out for an AI tool if it made your life easier or solved a big problem?
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AI Rules: Any red tape at your place when it comes to using AI tools?
Keen to hear your thoughts, experiences, and whether you think AI's a game-changer or just another buzzword.
Cheers!
At a fund now and we have been working with data science consultants to automate some of our sourcing. I also used chatGPT a bit during my time in IB to brainstorm. The text based tools are great for getting initial ideas and word smithing but quickly become useless because of AI hallucination. You can’t rely on any facts it presents.
How would your usage change if AI hallucinations were at large removed and extinct (which is where the tech is going) and the data GPT had was real time updated information, whether from financial statements or industry reports as well as any internal presentation you had?
I agree that a GPT tool for our purposes should definitely have a sources function to view the actual source of the information it presents. Seems like hallucinations cannot be completely removed but reviewing the source of the information can solve that problem. We note down sources to numbers and facts in decks at any case, so this might even make it more productive to get a head start for content generation.
Do you have a tool you use specifically other than ChatGPT? Also do you pay for ChatGPT 4? Is it worth it?
Comps
Wordsmithing and email templating is probably the extent I'd realistically use it for. Agree that AI hallucination is the biggest barrier to it becoming a useful tool. My coverage sub-sector is biotech, and for fun I asked ChatGPT questions around the competitive landscape for certain therapeutic targets, and it spit out initially convincing but flat out incorrect info around which company was developing which drugs, phase, recent data, etc. Including stuff easily found with a quick search.
As a director now, a lot of my job and value add is around knowing the "inside-ball", which AI isn't going to be helpful with for a long time. Things like which investors are interested in what types of companies, where they're spending time, larger consolidators and what type of M&A opps they're considering. Emerging themes across companies in the sector, how certain legislation is going to affect the sector, etc.
I can imagine that in my more junior days as an analyst and associate, perhaps the right AI implementation that aids with data digging / dumps could be helpful. I'm thinking about ones that can actually accurately spread trading and transaction comps with PFs all done correctly, etc. At our bank, we do have an offshore team that analysts/associates can send requests to for these sort of straightforward exercises. I could see AI, if it actually is accurate, replacing that team.
"Inside-ball" argument is interesting and I agree. I am not a director but I imagine most information you ingest should be rather crisp and interesting. If AI would give you real time updated filing data in a structured and crisp manner and mix it with the relevant news, would that satisfy your "inside-ball" work? Not 100% obviously but maybe how much?
Agree that as a former analyst and intern, my job could have been very much accelerated with AI instead of me waiting for documents that come from overseas teams (India) - did any bank adopt this tech though or is it just street/hype talk?
Hi OP — very obvious that you’re doing customer interviews right now to develop a startup around AI for investment bankers.
Good luck on your product, just recommend not asking such leading questions since you’re only going to get feedback that you want to hear. Not feedback that you need to hear
Helps me formulate the investment thesis, writes out industry analyst
AI is really not as smart currently as people are making it to be. It has a lot of factually incorrect statements. Currently, it is only good to write out your ideas for you and that is really it.
Can you eloborate on which functions AI is bad at?
Most... you really have to probe it and double check what its saying. It is going to be an amazing tool, but not this all-encompassing solution that is able to eliminate jobs that require some critical thinking.
ChatGPT is extremely useful when you give it boundaries, for example telling it to only use sources provided by you etc. If you simply write the names of the articles you want chat to use and to include references in the text, chat can produce pretty much any essay with correct references (!!!), requiring minimal rework on a college level.
For banking, I would just want a way to give chat more info of what I need it to analyse - since information & sources are usually much larger, complex and just packaged in a large variety of ways. This would make everything 100x easier I think
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