The potential applications of AI in investor relations are vast, and players who make most use of this technology are likely to be well-positioned for success.

Patrick Yau, managing director of strategic investor relations at Edison Group, writes about how AI is changing the business of communicating information about investment. The process of informing investors about what is going on at a firm needs to keep pace with technology, and be mindful of channels including social media. (The editor of this news service recently commented on the implications of bankers and politicians using WhatsApp for business.)

Wealth managers make constant use of investor relations information, so this topic should be of interest. We are glad to share these thoughts, and invite debate. The usual editorial disclaimers apply. Email tom.burroughes@wealthbriefing.com
 

Artificial Intelligence has emerged as a transformative technology that is poised to revolutionise the way companies interact with investors. In today's data-driven financial landscape, AI has become increasingly important, offering a wealth of potential benefits to investors and businesses alike. Despite this, however, many investor relations officers (IROs) in the wealth management and private banking space have yet to fully embrace the capabilities of AI. Recent research by the National Investor Relations Institute shows that while IROs acknowledge the potential impact of AI on the IR profession, many are not taking full advantage of AI-powered technologies to streamline their work.

As the financial world continues to evolve, the adoption of AI presents a unique opportunity for IROs to enhance their skills and improve the accuracy and efficiency of their work. By embracing the technology, IROs can stay on the cutting edge of investor relations and provide greater value to their organisations. 

Opportunities for IROs 
Advances in AI offer IROs a wide range of opportunities to enhance their work and shape their message to investors. One of the most significant opportunities that AI presents is the ability to automatically summarise earnings' calls or investor presentations using Natural Language Processing (NLP). Using AI to analyse, interpret and understand human language, IROs can extract key themes and topics from investor calls, reducing the time and effort needed to summarise calls manually. This, in turn, frees up time to focus on higher value tasks such as analysing investor behaviour and creating targeted communications.

In addition to the benefits of NLP, AI also presents significant opportunities when it comes to data generation and analysis, streamlining the process to enable better data-based decisions and more effective investor targeting – something particularly useful when navigating the complex and ever-changing world of investor sentiment. By leveraging AI, IROs can gain a more comprehensive understanding of investor behaviour, allowing them to communicate more effectively and tailor their messages to the appropriate audience. 

As a recent development, IROs should be mindful of the fact that investors can now use language model tools such as ChatGPT to summarise company research. By understanding how these tools work, IROs can ensure that their public disclosures are effectively captured by these tools which in turn can help shape investor sentiment. While it must be noted that this may make it more challenging for IROs to control other publicly available information, recognising and adapting to the growing importance of AI-powered tools is essential for IROs to succeed in today’s fast-paced, data-focused environment.  

Harnessing the power of AI 
AI technology is rapidly becoming an indispensable tool. By using AI, IROs can gain deeper insights into investor behaviour, allowing them to streamline their communication and decision-making processes. 

While the adoption of AI can lead to increased scrutiny by investors, placing greater pressure on IROs to provide accurate and reliable information, it can also be an opportunity for them to build trust and credibility. Voice analytics software, for example, gives investors the opportunity to analyse the language-use and tone of IROs to evaluate their potential. This means that IROs must be aware of the tone and content of their communication, as investors may be using AI to evaluate their credibility and trustworthiness. By improving the quality of the information they release and communicating more transparently, IROs can establish a reputation for reliability and gain the confidence of investors.

The adoption of AI-generated data and analysis presents a wealth of opportunities for IROs to gain deeper insights into investor behaviour and make better-informed decisions. While there are potential risks associated with the use of AI, such as the potential for biased or inaccurate information, these can be mitigated by carefully assessing the quality and accuracy of the data used in AI-generated analysis. Additionally, IROs should consider how they can influence third parties, such as analysts or the press, who publish information about the company.

By providing these parties with accurate and comprehensive information, IROs can ensure that their analysis is based on reliable data. They can also offer guidance on how to interpret and analyse the data to prevent incorrect conclusions or recommendations. Ultimately, by leveraging AI-generated data and analysis and proactively addressing the associated risks, IROs can establish a reputation for transparency and reliability, building trust with investors and other stakeholders.

By proactively managing the inherent risks of AI adoption and taking measures to ensure data accuracy and reliability, protect sensitive information, and maintain investor trust, IROs can effectively harness the power of AI to enhance their communication and decision-making. This strategic move can lead to a stronger and more valuable organisation, ultimately resulting in better outcomes for all stakeholders.

The future of AI in IR 
Adopting AI in investor relations is not simply a way for investor relations professionals to keep up with the times, but it is also a strategic move to in fact be ahead of the curve and gain a competitive advantage in the market. The use of AI in IR presents significant opportunities to enhance IROs' performance in a highly competitive environment, and possibly their reputation.

AI gives IROs greater insight into vast amounts of data, allowing them to identify trends, patterns, and correlations that may not be immediately apparent to humans. With the ability to analyse and process large amounts of data in real-time, IROs can make faster and more informed decisions, respond to changes in the market more quickly, and communicate with investors more effectively. This can help them to position their organisation for success in a rapidly changing market environment.

And finally, investors are increasingly using AI to analyse company data and make investment decisions. Companies that cannot keep up risk losing the trust of investors and being left behind in the market. It is therefore important for internal investor relations teams to be using the same methods and technology in turn.

The potential applications of AI in investor relations are vast, and IROs who leverage this technology are likely to be well-positioned for success. By prudently embracing AI technology, IROs can better position themselves and their organisations for success in a rapidly changing market.