How machines producing 'cognitive content' will displace banks' research jobs

When it comes to investing, the only content that matters is that which is relevant, timely and personalised. In a word, it needs to be actionable.

A shift in recent years has seen a rise in demand from both the buy and sell sides for actionable content, but there is a growing disconnect that’s giving the industry a serious headache.

The pain stems from the fact that there is too much unrefined financial content (data and news) and very little of it matches with the agendas and mandates of investors and sales people throughout financial services, most pressingly at hedge funds and asset managers.

Revenues down, homogenisation up

The failure to give sales teams content of sufficient quality is a serious problem for institutions. Firstly, with revenues at top tier investment houses lower than at any point in the last five years and continuing to fall, sales resources are being squeezed. MiFID II forced banks and brokers to rethink revenue models, ending the practice of bundling together trading and research. As a result, the cost of investing continues to fall and this is squeezing bank revenues and budgets for middle and back office functions, such as research and marketing.

This is leading to the homogenisation of content. It’s cheaper to create but it is often offering clients and prospects information that is irrelevant, out of date and impersonal. Content like this is damaging client/advisor relationships, as clients are tired of being sent recommendations that don’t matter to them. This is one reason why more investors are now directing themselves.

Headcount up, content quality down

In contrast to south-bound revenues, the number of sales people needing quality content is on the rise as hedge funds and asset managers increase headcount. With more sales people needing to keep more clients happy, the chances of personalised content being delivered to each of them - the type that leads them to action - is dropping through the floor. Poor content means little client engagement and action. And bank margins and revenues get even thinner.

As these trends diverge further, sales teams struggle on, trying to decipher and prepare data, information and news in an efficient manner for clients. Ironically, with more trading being executed electronically or by operations, front office sales teams should have more time to find actionable insights. But, without the resources and tools, they struggle. They need help.

Something to ease the pain

One way institutions can sooth the headache is with “cognitive content”, or “machine-intelligent content”, which aims to order language in a way that inspires readers into action. In financial services, relevant, timely and personalised, high-quality cognitive content - the sort that harnesses learnings from machine learning - nudges investors to engage and execute.

By embracing machine learning and AI, sales teams can scale up content creating capabilities, giving themselves a higher chance of being able to service an ever growing number of clients. Sales people can’t do it on their own. They don’t have the resources or the man power. But by embracing future tech, they may be able to win back the trust of their clients by giving them actionable insights. Cognitive content should be able to help ease the content headache.

The author is a former managing director at Deutsche Bank and Bank of America Merrill Lynch and Co-CEO of Arkera, a London-based financial technology company using its extensive financial expertise & AI to solve institutional challenges.