By Antoine Vettes, Co-founder of UpSlide
Investment banks are founded on tradition and reputation. The time and effort that goes into maintaining an elite and professional front is massive, with a core focus on delivering high-quality and accurate resources to best serve each client.
However, this level of detail comes with its own set of challenges, not least being the fluctuating productivity rates from teams tasked with getting each document up to the expected standard. When efficiency dips, the bottom line takes a hit.
An additional long-standing challenge has been the rising levels of burnout amongst junior bankers in particular. Expectations amongst younger generations in the sector are changing; work/life balance and a sense of purpose are becoming higher priorities for a large proportion of individuals. Now that high salaries and other financial incentives aren’t enough to keep workers sweet, they’re quick to jump ship in search of a more balanced work life.
So, when the pressure is on to support and retain staff through the “banker burnout” phase – alongside meeting wider business objectives – it’s imperative that investment banks achieve optimum efficiency to deliver maximum value to clients. Here are some key considerations for investment banks looking to optimise their processes.
Automating manual tasks
As with most resource-heavy industries, investment banks are inundated with repetitive tasks during the creation and review stages of preparing pitchbooks and IMs. Naturally these tasks take several hours to complete.
Tasks such as making multiple updates to documents after minor changes are made to financial models are, of course, necessary. However, doing these manually takes a great deal of time, often resulting in late nights at the office, and a major hit to productivity thanks to fatigue and stress.
What if the long hours spent on manual tasks could be limited, or better still, spent on more impactful work, such as improving the quality of analysis, conducting more research, building more complex financial models, or perfecting the messaging?
By automating some of the manual processes, time could be freed up for bankers to develop their skills, and banks could greatly reduce the risk of human error. Why waste time fixing faults when there’s a simple way to avoid mistakes in the first place?
Maintain focus on existing and future employees
As is becoming more obvious, financial incentives aren’t enough to keep employees happy, especially as we navigate banker burnout. Stories of junior workers on high salaries quitting their jobs for far less lucrative industries are becoming more commonplace. But the cost of replacing them is just as great.
Replacing and retraining these highly sought-after professionals is costly. On average, this can be up to nine months of an employee’s annual salary, taking into account recruitment, retraining, and general productivity loss. Given that the average base salary of an analyst ranges from $100k – $125k, with total compensation as high as $250k, that equates to around to $187k per junior banker. The need to retain these employees for as long as possible is vital to maintain the bottom line.
In addition to the workforce prioritising careers and firms which enable good work/life balance, they are also looking for a greater sense of purpose in their day-to-day work. We often hear of junior bankers leaving their roles without a new one lined-up, just to escape an unfulfilling role.
It all comes down to boosting efficiency and providing junior bankers with more rewarding opportunities in their day-to-day jobs. Using innovative tech to automate manual tasks and eliminate the need for rounds of laborious edits means employees can focus on more value-add activities and develop their own skills – which meets their rising expectations. That which benefits the employees, ultimately benefits the business.
Tradition vs evolution
Investment banking is founded on decades-old traditions, which aren’t easily uprooted. However, we’ve reached the point where evolution needs to surpass the importance of maintaining tradition if the industry is to remain on the steep path of success.
For some, these manual, repetitive tasks and late nights at the office are a rite of passage for an investment banker, or a necessary test to ensure sufficient commitment to the cause. The idea of automating work and saving bankers from these mundane tasks can seem like a shortcut that more senior employees weren’t afforded; it’s not always fully embraced.
But one of the biggest challenges is that traditionally, banks have been so busy with their day-to-day work that taking time out to investigate ways to improve processes and drive greater long-term efficiency has not been a priority. Instead, in many cases, firms continue to use the tried and trusted systems which have been in place for years, no matter how frustrating and inefficient they may be. The mentality is often, “if it isn’t broken, don’t fix it.”
Understandably, when it comes to technology, the development teams responsible for installing and managing the existing systems look to make incremental improvements rather than bolder, more widespread changes due to the time and cost involved. It can be difficult to get the buy-in to overhaul how the firm operates at a fundamental level.
As with all major business decisions, the charge must start at the top. Securing board buy-in is therefore priority number one, followed by those in charge of installing and managing processes, and the users themselves. Demonstrating value is always the challenge, but we’re seeing more changes take place within banks as they work to improve this. Establishing new roles, including Chief Digital Officers, to ensure employees have access to the necessary resources and support for their tasks is just one example.
We should certainly be aiming to see more evolution in the years to come.
No time to waste
The last decade has witnessed a surge in demand for more innovative tech to streamline processes and boost overall efficiency within investment banking. And we know this call is being heard by those for which it is intended, as change is already taking place across the industry. But more needs to happen – and fast.
An increasing number of junior employees have one foot out the door, so investment banks cannot afford to hesitate. It’s certainly not time to turn our backs on tradition, but the industry does need to make room for more evolution.
Legacy tools, which were often built in-house by major banks, can’t keep up with third-party applications. They are continuously progressing, have a better UX, and require much less maintenance for internal teams – particularly IT.
Forward-thinking organisations are getting ahead of the game and are taking advantage of additional platforms, like Power BI, to leverage the growing volumes of data effectively. Keeping up with the latest innovations and technology will place firms at the beginning of the race to a more efficient future and will make themselves far more appealing to existing employees and incoming talent.
When the competition is fierce, investment banks cannot afford to be left behind.
Author: Antoine Vettes
#InvestmentBanking #Banking #Technology #Efficiency
