Greetings and Happy Early Autumn–
As we wrap up another slow quarter of new deals, we thought we would use this quarter to examine some interesting banking and M&A-related content related to AI. We know that the ‘hype’ associated with the topic is significantly focused on attracting investments for the future; however, we are seeing some emerging trends that we feel will make the end-to-end of M&A much more effective over time.
Already, we are reading about how tools like generative AI (or large language models) are being used and tested within institutions of all asset sizes. From CX bots to tracking more rapid predictive client behavior changes to risk management triggers, these tools should help the industry adapt to better and more efficient deployments – thus positively impacting the valuations of institutions down the road. Within the attached content, you will garner insight into the ways bank M&A will be handled, from valuation of targets to integration of new customers, based on work done in leading organizations from other industries. Most importantly, you can begin (or hopefully evolve) your institutional use cases for AI to create new value and manage associated risks.
While the higher (or restrictive) for longer world is here as we embark on our formal 2024 planning, leaders are going to need to find new ways to think about their business futures – if they plan to have one. An institution’s response and depth and breadth of investments to meet the increasing demand for real-time banking experiences will dictate this. We continue to see a growing bifurcation in relevancy for institutions providing purely financial products that require a high dependency on costly sales and distribution models (relative to overall OpEx). This will be an area that we continue to monitor as we anticipate new deals (regulatory reality permitting) to come online later this year and into the next.
To wrap up, I found the quote below in the linked case study from McKinsey very refreshing to read. It hits on what we see from leaders that are truly in sync with what it really means when you commit to change your organization. It isn’t just finding a new wrapper for the same product but a reminder that leadership is what you do and not what you say.
"Governing a digital company is different than governing a traditional company in terms of budgeting, empowerment, decision making process. And this has a lot to do with leadership and culture.” —Francesca Raffo, Chief Transformation Officer and Deputy CEO, BCP
Cheers,
