The rapid development of AI does not stop at Investor Relations (IR) either. According to a recent study by DIRK and EY, AI-based systems and large language models have reached the capital market. Large language models are machine learning models that among other things can process huge amounts of text data and understand human language. ChatGPT is a prominent example.
Source: EY, S. 11
Where is the greatest potential seen?
Particularly great potential is seen in Investor Relations (IR) for translations and speech recognition.
81% of respondents reported this. An almost equally high potential is predicted for text generation, with 80%. Additionally, IR executives see further potential in the reduction of manual processes and in research and analysis.
AI support in evaluation – communication – finance – governance
According to IR officers, AI can provide valuable support, especially in the daily IR range of tasks evaluation – communication – finance -governance:
FIGURE: Ranking of support from AI for thematic and specialised IR tasks, data: EY, own grafic
Source: EY, S. 13
AI is considered particularly helpful for expertise-related IR tasks in the area of evaluation, especially in peer group research (54%) and analysis (50%).
According to the study, this is particularly evident in large and medium-sized publicly traded companies, which see a significant added value here. Following in third place in the area of communication, with 43%, is the response to standard inquiries, followed by newsletters with 37% and management reports with 35%.
Challenges and risks
Despite the opportunities, the use of AI also carries risks. The greatest concerns involve the confidentiality and sensitivity of information. Experts see the danger that company data could be used by AI to generate results for third parties. Other risks according to the study include security concerns, data protection issues, and the potential liability for AI-generated results. The lack of internal company AI policies is also cited as a further problem.
FIGURE: Biggest risks and challanges of AI, data: EY, own grafic
Conclusion
The study shows that AI offers significant potential in Investor Relations (IR) work. It can support IR officers as a co-pilot, increase efficiency, and professionalize and automate financial communication. However, careful review of AI-generated results is essential to support corporate governance and the capital market. Thereby the expertise of the IR function remains indispensable.
Source: EY