Embracing AI in investor relations: Leveraging opportunities and navigating challenges
Over the past decade, the investor relations (IR) profession has undergone a substantial technological transformation, unlocking more effective and efficient communication between businesses and their stakeholders. From the online distribution of announcements to webcasting, webinars, and video conferencing, technology has become the cornerstone of effective IR practices. Now, a new epoch emerges as AI takes centre stage.
The integration of AI into IR offers unprecedented potential for enhancing efficiency, accuracy, and strategic decision-making. Yet, the path to fully harnessing AI’s benefits is accompanied by a trail of challenges that must be navigated with astuteness and adaptability.
A recent pulse survey conducted by Citigate Dewe Rogerson gives us an insight into how Investor Relations Officers (IROs) are approaching the adoption of AI. Despite the furore surrounding generative AI tools, like Chat GPT, over 50% of our respondents haven’t yet explored such tools (but do have the intention to). And, while around a quarter are already using generative AI in their roles, over 15% of respondents noted employer restrictions as the reason for not utilising AI tools.
The survey also reveals that while most IROs recognise that AI technology can support them in their role, they are yet to realise the full potential of AI and risk missing opportunities in an increasingly AI-driven investment landscape.
AI in investor relations: Beyond the mundane
In previous CDR insights, my colleagues have noted that AI in IR, and indeed communications more widely, primarily serves as a means to delegate mundane tasks and elevate efficiency. It was therefore unsurprising to see the survey confirm this suspicion.
However, a closer examination reveals the diverse dimensions in which AI tools are wielded by some IROs. From generating initial drafts of external communication materials and sentiment analysis to market intelligence and peer group monitoring, AI’s impact on investor relations is undeniable.
However, to unlock AI’s potential, IR teams must remain attuned to developments in AI technology and keep pace with the wider investment community’s adoption of such tools.
A new landscape of informed decision-making
Investors are increasingly using AI, including Natural Language Processing (NLP) to analyse materials and, ultimately, inform investment decisions so it was interesting to see that a staggering:
90% of survey respondents have never used AI tools to analyse their investor communications materials
96.8% have not examined their results calls or investor presentations for tone of voice and/or body language.
This gap in leveraging AI-generated insights leaves IROs uninformed of vital information that investors might be employing, thereby exposing them to potential hidden risks.
Preserving the human aspects of IR amidst AI integration
A resounding theme prevails – not only in our survey findings but through the conversations we have with IROs, analysts and investors: while AI’s growing influence on the investment community is undeniable, the fundamental human dimension of investor relations remains irreplaceable. This is particularly evident in relationship-building, trust, and nuanced communication. IROs concur that personal connections, access to management, empathy, and the art of translating corporate strategy into investor-friendly language are dimensions that AI cannot adequately replicate.
Navigating data challenges
While AI’s extensive capabilities are apparent, certain challenges exist relating to data confidentiality and protection, as well as concerns around the quality of AI-generated information. So, it’s no surprise that almost a fifth of our respondents referenced the existence of an established policy for the responsible use of AI and an additional fifth have a policy in development. The absence of policies among two thirds of respondents raises concerns about the potential governance risks companies face by not setting out clear guidelines for the use of AI by employees.
Striking the balance
As AI continues to impact the investment community and the role of investor relations, it’s key that IR professionals strike the right balance between embracing technology in a considered manner and preserving the essence of human connection. By doing so, they can pave the way for a future where AI augments their capabilities, allowing them to serve investors with greater efficiency, accuracy, and depth of insight.
If you have any questions or queries, please do drop us a line: hello@citigatedewerogerson.com