September 26, 2022
The use of technology in investor relations (IR) isn’t an unusual concept. Most companies have successfully embraced technology in the form of virtual meetings and interactive platforms for example, especially over the past two years. Given the evolution of how information is consumed and the cost benefits of using technology, this is an expected trend.
More recently, technological advancements such as artificial intelligence (AI) are offering us a glimpse at the potential to provide market participants with additional insights that were previously not available.
One of AI’s greatest attractions is that it lets you comb through large amounts of data and extract relevance within a few milliseconds, allowing you to quickly bring critical information to the fore. Deriving value, however, relies on the ability to dissect the data, interpret the results, and then make informed decisions – and this remains a human-led process.
IR ultimately comes down to the strength of human relationships which have been built and maintained, especially in crises. For this reason, introducing technology like AI is not going to replace existing processes.
When combined with traditional feedback mechanisms, such as perception audits or one-on-one investor meetings, AI derived findings do have the potential to make your IR programme more dynamic and responsive, and early applications of AI within the IR framework have shown promise in several areas.
AI, by using natural-language processing, can analyse the language used in earnings calls and investor days to gauge investor sentiment. It can also examine what is said to quickly extract trends and focus areas. This could allow IR professionals to better understand the motivation behind investment decisions and better tailor their messages to existing and potential investors.
Conversely, this analysis could allow IR professionals to evaluate and tailor executive language to ensure it is accomplishing what is intended. How you say something is as important as what you say. When executives use positive words, does their tone match up? Or is there a discrepancy, implying things are not going as well as they say? Having visibility of your company’s sentiment analysis can provide valuable insight into what your collateral is inadvertently communicating.
AI can also play more humble roles, within chatbots to automate day-to-day IR activities, or in preparing drafts of communications materials. And apart from the direct benefits within the IR process, IR professionals need to be aware of the use of AI by investors to try and gain an edge in terms of the information they have access to.
Initial results are suggestive of the potential for AI to provide analytical and quantifiable insights, allowing for better informed and crafted communication strategies. Because AI algorithms are trained on large data sets, they can improve rapidly, and the more widely they are adopted the more rapid this improvement can be.
At Aprio Investor Relations we actively keep abreast of technological developments that hold potential for improved IR. We know that the market rewards effective communication, visibility and transparency in the long run, and that when used effectively and responsibly, technology can help to bridge the gap between capital allocation today and long-term value creation.
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