Sometimes a breakthrough starts with some simple questions. Early adopters of artificial intelligence in the financial services industry must have asked themselves a couple. “Can we make the M&A process less labor intensive and still get high quality results?” and “How can we optimize our model to achieve greater profitability?”
Technology has always been the engine of disruption for traditional processes and business models in the financial services industry. Disruption of M&A process at investment banks is already underway. New tools are being developed with the aim of fully automating complex process by applying a high level of intelligence. The goal is to reduce the amount of time that analysts spend on repetitive rule based activities. As more labor intensive processes are automated, we’re likely to see impacts that stretch far beyond the investment bank’s operations. The ultimate outcome is certain to have a profound effect on both outsourcing providers and the banks that outsource M&A work.
These Artificial Intelligence (AI) based solutions are further reducing labor requirements for outsourcing services providers. Simple rules based transactions are an easy target for robotic process automation based on AI. Process automation platforms and cloud delivery provide the foundation for more sophisticated BPaaS models. Artificial Intelligence works by mimicking human input in complex work activities requiring judgement and predictions. As AI technologies like machine learning, semantic search and text analytics achieve more widespread adoption in financial services outsourcing, we’ll experience even steeper improvements in productivity. This change may be the driving force behind the redesign of service provider business models and create conditions where potential outsourcers reconsider the very need for service providers.
Service providers will be able to decouple labor from productivity, giving them more flexible and profitable business models. First movers have the advantage but will more likely incorporate these innovative capabilities into new contracts. Other technologies that can be implemented without a technology overhaul, like Robotic Process Automation (RPA), can be deployed through existing outsourcing contracts. Some investment banks may opt to skip outsourcing altogether if solution providers can deliver applications that can be integrated into current M&A workflows seamlessly and produce high quality outputs.
It still remains to be seen if AI based solutions will fundamentally alter the economics of outsourcing M&A work but the pieces are starting to fall in place.