9 recent investment banking trends in 2024

According to Statista, the investment banking market worldwide is anticipated to witness a significant revenue increase, with projections indicating a staggering US$0.35tn by the year 2024. With growth this quick, it is safe to assume that digital technologies have disrupted almost all walks of life, and investment banks are no exception.

Between the rise of Fintech and newly imposed regulations worldwide, the banking sector is advancing faster than ever. Therefore, to be leaders in a highly competitive environment, professionals must ride the wave and stay on top of investment banking industry trends.

Here’s a brief introduction to the top investment banking trends that are currently booming across the globe.

In this article:

Artificial intelligence (AI)

Artificial Intelligence (AI) and machine learning have transformed the use of investment data and are now helping leading investment banks better understand consumer trends, point-of-sale credit decisions, and other gaps in supply and demand. Since AI also has the potential to automate trade processing for investors, AI-driven banks offer faster trades. Some of them utilize specialized learning techniques to identify and predict possible successful investment strategies for customers.

Another way AI has revolutionized the Fintech space is through its efficient fraud detection, risk management, and credit-rating algorithms. Thanks to AI, fraudulent transactions can be flagged in advance and then verified manually to limit investment scams. Also, smaller Fintech startups with limited consumer data are in a better position to assess the credit-rating and repayment capacity of consumers and then disburse loans without collateral.

AI is currently being used by Man AHL, a London-based company, to identify profitable investment strategies and execute trades over several global financial markets automatically.

Generative AI

Generative AI is a newer technology with the potential to be even more transformative in investment banking trends. GenAI can create new content, like financial business models or presentations, based on the data it's been trained on. This could revolutionize tasks like deal research, due diligence, and client communication.

Robotic process automation

RPA automates repetitive, rule-based tasks, freeing up human investment bankers for more strategic work. This can include things like data entry, report generation, and compliance checks. RPA has been around for a while, but it's gaining traction in investment banking as a way to improve efficiency and accuracy.

More real facts

AI in Fintech: Use cases of AI and ML in Fintech

More than 90% of global Fintech companies are already relying heavily on artificial intelligence and machine learning. Do you know how?

Let's see

Direct listing technology

Most business models are now moving towards direct listings instead of IPOs to raise capital. With IPOs, companies have to hire underwriters who facilitate the IPO process and charge a commission for their work. Those who can't afford to underwrite, don't want to share dilution, or are avoiding lockup periods often choose the direct listing process instead.

This shift towards direct listings has created a demand for new technological platforms that will help small and medium-sized companies with the entire process. It is reasonable to assume that a wide range of off-the-shelf disruptive technology solutions for direct listings that will help companies save millions of dollars will be introduced in the near future.

Spotify and Palantir are great examples of companies that have opted for direct listings instead of IPOs.

Natural language processing

Natural language processing (NLP), with the help of AI, is improving the interactions between computers and human language. NLP is helping investment analysts process unstructured data into structured, measurable data at a much faster rate than ever before. It has the potential to crunch annual investment reports, investor calls, and regulator statements and convert all of it into digestible information.

NLP has seen widely used applications in the due diligence process. Due diligence teams can now leverage NLP to process information faster and improve the efficiency of an otherwise time-consuming activity.

FinBERT is a brilliant example of NLP in the investment sector. It uses pre-trained language models to perform financial sentiment analysis of certain data sets. This analysis tells how the market will react to a certain piece of information in terms of stock price rise or fall.

Virtual Data Rooms

A Virtual Data Room (VDR) is an online database that can securely store confidential information. VDRs are usually used as ongoing repositories for financial information, allowing businesses to store, secure, and safely access their critical documents.

With cyber-attacks on the rise, VDRs have provided a great solution for investment banks to store sensitive corporate data virtually. They are particularly useful in storing deal-making information for mergers, acquisitions, and company IPOs. Access to this information is given only to the relevant parties, which leads to increased productivity, better security, and improved regulatory compliance.

Open Banking

Open Banking is another current trend in investment banking that was formed on the basis of the PSD2 directive and the Open API. With the help of open banking, investment banks can more easily exchange data with third-party providers (TPP) — providing access to customer account data and payment infrastructure using application programming interfaces (Open API).

One of the key advantages of Open Banking is the “deployment” of a client-oriented banking service, improved quality of customer service, and more services in a more convenient format.

The main task that open banking solves is to overcome “data slavery”: classical financial institutions have information about customers, and this prevents innovators from entering the market. This also affects consumers, who do not have the opportunity to choose the most profitable and suitable services.

Open Banking allows, if not completely eliminates, then at least minimizes the problem of “data slavery.” Open protocols make it possible for the collected information to be used by all market participants.

For classic financial institutions, Open banking is more of a threat than an advantage. Investment banks will have to share information, which breaks their monopoly. But, if you look at the future, they get an impetus for development. The need to share data and compete in new conditions leads to the need to create new services, innovate, and improve customer experience.

For startups working in the financial sector, Open Banking opens up many opportunities, the key being the ability to initiate payments from a client's account and receive transaction data.

You can also be interested in Core open APIs for Banking & Payments.

Subscribe to our news

Subscribe

X

Thank you for Subscription!

Sustainable finance products

Driven by growing pressure from investors, regulators, and the public, sustainable finance is gaining momentum worldwide. What used to be considered a niche product and a futuristic concept known only in the investment community is now becoming an urgent strategic priority and operational reality for all players in the financial sector. Post-coronavirus, sustainable financing could be the sector's biggest challenge and biggest opportunity over the next decade.

Sustainable financial products are a type of financial service that encourages organizations to consider long-term environmental, social, and governance (ESG) criteria when making business decisions. The main goal of such products is to provide more equitable, sustainable, and inclusive positive effects for companies, local communities, and society as a whole. The most obvious manifestation of such financing is the inclusion of environmental, social, and governance factors in the investment strategy, as well as the increasingly accepted concept of inclusive capitalism or capitalism for all stakeholders. In addition, in the context of climate change, sustainable finance has a key role to play in financing the transition to zero net greenhouse gas emissions by 2050. 

You can find real cases of using this trend in Sustainable Fintech. Few cases to take as an example article.

Blockchain technology

Blockchain is an extremely safe and highly traceable method for doing financial transactions virtually. Multiple cryptocurrencies that are based on the blockchain are being used in these dealings.

The financial services sector is also experiencing an enhanced rate of adoption of blockchain due to a couple of reasons. Firstly, it replaces intermediaries between fund transfers and provides a peer-to-peer transaction method. Secondly, the blockchain is extremely secure and almost impossible to tamper with. The chances for any type of fraudulent activity to occur are non-existent.

Although blockchain technology is incredibly useful, it hasn’t experienced growth as fast as AI or ML. This is because blockchain is a slightly complex concept that isn’t easily digested by average consumers. Also, since cryptocurrencies are still unregulated in most parts of the world, there is a lack of trust in transactions on the blockchain, which is hindering mass adoption.

Several cryptocurrency wallets such as DDKOIN and OKEx are making active use of blockchain to process, hold, and transact cryptocurrencies for users.

Mobile apps

All blue-chip investment banks now have fancy apps that provide services they previously offered inside a physical branch. Some of these services include access to real-time market data analytics, market dynamics, the latest market intelligence, investment banking sector reports, and so on.

Users can create customized dashboards that allow them to share data directly with their representatives. The best part is that as more APIs are developed, these apps work directly with many other investment apps, making it even easier for consumers.

Acorns and Affirm are two apps that offer a wide range of financial and investment-related services, but they are only the tip of the iceberg. There are dozens of others offering similar financial services in the investment banking space.

Relationship management

Relationship management systems are designed specifically for deal-driven teams to streamline their business development workflow and make their networks work for them. The key relationships investment bankers have and the matrix of relationships networked across industry groups, product groups, and financial sponsor coverage teams make up your greatest technological asset. If you manage this asset efficiently, you can do wonders in the investment banking space.

Dedicated Customer Relationship Management (CRM) tools such as Dynamics 365 provide lots of predictive analytics and automation capabilities that you can use to nurture customer relationships and get the most out of them.

Final thoughts

Having access to the latest investment banking technology trends can be of great help, but what is more important is how you put it to use. And if you don’t apply it right, even the most advanced financial technology can’t help you. The future of investment banking is likely to see a more tech-enabled workforce focusing on higher-value activities.

While technology may automate some tasks, the human touch will remain important. Investment bankers will need to develop strong analytical and problem-solving skills to navigate complex situations and provide strategic advice to clients.
Choosing a reliable Fintech software development partner for your company may be just what you need to become the next unicorn in the investment banking space. If you need help, Geniusee is always available to bring your dreams to life.