Chatbots in the Investment Banking Industry: A Primer

Market for applications is maturing. Industries across the board are benefiting from it and investment banking is not behind.

Industry leaders are adopting new tech at both front and back offices.

A few of the key technologies that are especially making a mark in the investment banking industry include:

• Artificial Intelligence,

• Blockchain,

• Quantum Computing, and

• Cloud Computing.

Many are shifting their legacy systems to cloud and harnessing the agility to bring flexibility to their product and services solutions for the clients.
One of the marvels of these times that especially stands out are conversational agents aka chatbots. These agents are bringing in superior customer experience and operational efficiency in investment banking.

Bot Assistance: What are Conversational Agents?

Conversational agents are computer programmed call center agents, also known as chatbots. They are capable of conducting textual and voice conversation with the consumers.

Basic-level, rule based chatbots handle simple routine queries efficiently, including FAQs. However, they lack self-learning features and adaptive abilities.

Intelligent bots, on the other hand, are powered by cognitive technologies and are capable of handling human-like conversation with accuracy. Due to their continuous learning and adaptive features, they can bring personalized experience.

Voice based chatbots are a combination of voice-recognition and cognition technologies. They can be invoked through smartphones or speakers like Echo Dot.

The chatbots powered by both Natural Language Processing and Machine Learning can process both voice and text inputs, understand the user intent and extract information relevant to the user.

A few leading conversational agents include:

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• IBM Watson

• Google Dialogflow

• Microsoft Bot Framework




• IPsoft

• Amazon Lex

Chatbots Use Cases in Investment Banking

Capital markets are embracing the use of chatbots, particularly conversational AI. Investment bankers are finding use for the technology to augment customer and internal relations and cost of ownership through automation.

Banking professionals are adopting chatbots to offer self-service capabilities to clients and reduce client dependency on CSGs (Client Service Groups).

Let’s parse two of the most important dimensions of investment banking and their use for chatbots.

Taking Stock: Across Two Divisions – Research and Sales & Trading

Research Services

Within research and development domains of investment banking, using chatbots:

• Enable clients to use research services 24X7. Clients can talk to the bot at any time of the day and night, and answer client queries ranging from analyst reports, and research coverage to target price and so on.

• Can Extract information – even from unstructured reports.

• Understand research related nuances, and provide accurate answers to the client.

Example: J.P. Morgan.

Morgan Stanley has built an AI powered conversational agent for users on the internal side to answer research related queries and plans. Clients are offered this service through Amazon cloud voice service.

Sales & Trading

Despite heavy electronic trading that banking professionals are becoming conversant with, a significant amount of high-touch client services are still prominent. They include pre-trade queries such as quote management, and during the trading process comprising execution of bond trade. Chatbots can automate these points of contact with efficiency.

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Example: RBC and Alliance Bernstein.

They use chatbots, which message among each other to execute trades. The platform for messaging is called Symphony messaging.

Wrapping Up

Is investment banking industry digitalizing? A resounding yes.

It is even going a step further to adopt AI and Machine Learning in their products and services. It is predicted that the divisions within investment banking may also witness an overhaul.

Firms that leverage fintech will stay ahead of the line and eliminate competition. Going digital is the differentiation of this day and age. Among the slew of new innovations, conversational agents are increasingly finding acceptance within investment banking best practices as it continues to prove its utility across the world. Are you ready to jump on board?