Saturday, September 25, 2021

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    Investment banks: technology will not cut junior banker hours

    Newsletter: #techFT

    There is disagreement that the leveraged buyout boom of the 1980s was not caused by the invention of junk bonds, but by the advent of powerful spreadsheet software. Investment bankers can suddenly run complex trading scenarios and receive answers in the time it takes to double-click the mouse.

    Today, Wall Street believes that flashy software can be used to quell the rebellion brewed by junior analyst bullpen. New employees want to be more respectful of their time demands. automation In theory you can give them that. However, competition for customers suggests that junior bunkers should expect little change in their hundred-hour week.

    For decades, these juniors have collected PIBs (Public Information Books) that provide bound copies of securities filings and news articles related to senior bankers. With the software, you can create PIBs almost instantly. With the spread of tablets, hard copying is almost unnecessary. Similarly, updating stock charts and output tables in PowerPoint can now be done immediately instead of manually cutting and pasting into a 50-page book.

    Efficiency projects are welcome. Tech has already automated investment banking operations in many ways. All due diligence “data rooms” have been in place for years in law firm offices and then all online. FactSet, an analytics provider for deal makers, has grown to a market value of $ 14 billion. Start-ups like InCloud Counsel build tools to automate the regular negotiation of transaction documents.

    However, while these innovations are sophisticated, the average managing director has little or no concept of how they work. They may not even understand the basic workflow needed to put together a client’s presentation. Instead of burdening the working life of junior bunkers, automation may mean they do more.

    Investment banking remains a more attractive version of the play Glengari Renros, The prize that ended in 3rd place is over. Top deal makers are focused on selling as much as possible to as many clients as possible. This kind of incentive structure doesn’t change flashy software.

    Lex recommends FT’s due diligence newsletter, a hand-picked briefing on the world of M & here apply.

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