Yesterday’s FT featured a report entitled “Commerzbank sets AI to work writing analyst reports”. As the article describes, Commerzbank orients to sports reports to find out if AI can write basic analyst notes. The motivation is to reduce research costs, a Commerzbank representative says. MiFID II is behind it (don’t we know!). Commerzbank is working with German FinTech Retresco, a content automation company that has also successfully implemented their AI solutions in other business applications.
The idea to use what was once referred to as “robo writing” for analyst reports is neither bold nor is it far-fetched. Robo writing was successfully pioneered in the US sport reporting market where personal live reportage is commercially not viable for newspapers and online media. People, say in New York City, want to read about their local baseball and basket ball teams in Idaho. There are much stronger bonds in the US to local and University sports teams than anywhere else in the world.
Folks, this is a sign! If a mid sized bank in Germany can do it, then guess what the bulge brackets are up to. Investment analysis will never be the same again. And whether Commerzbank gets this thing into production or not, is completely irrelevant. Them or others are looking into automatization of investment research. That is what matters.
Hindsight is a great thing: I knew it all along. But this time I did sense it. My prediction 2017 was that soon we will see the first signs of industrialization in the shape of automation in investment research. And that for a simple reason: clients are not prepared to pay for maintenance research and other tedious analyst work. It is the ideas that matter.
I predict that we will see more of these ventures cutting into the unhasty turf of investment analysts (where many think of themselves as “artists”). You bet. And if you’re an investment analyst, and if you happen to be brave: take a look at Python, at R, and ask yourself, how you can use it to make your research more interesting and obtain better prices for it. Don’t wait until your clients present you some brainy 25 year old kid who started coding at the age of 5. If you listen carefully you can already hear the footsteps of these kids coming from behind …