Perspectives – Marc Cooper – July 2023

The Enduring Value of Relationship Banking
by CEO Marc S. Cooper

Throughout my career, big leaps in technology have changed the investment banking landscape. Now the transformative possibilities of artificial intelligence have captured the public’s imagination. Yet just how exactly will AI reshape the contours of the financial services industry?

In my view, AI-powered algorithms will prove a powerful productivity tool that will open up new and interesting business opportunities. It may ultimately have a more revolutionary impact on investment banking than the personal computer and application software.

Yet there’s one thing that I’m confident won’t change: The importance of cultivating long-term relationships with clients to provide the best, most calibrated merger and acquisition advisory services possible.

AI will support — but never displace — the client-centric focus that makes Solomon Partners so unique. It takes high-caliber insight from experienced professionals to generate the kind of personalized services our clients seek to thrive in a shape-shifting, competitive economy.

By understanding the nuances and intricacies of a client’s industry, boutique investment banks like ours provide customized advice and solutions that address specific challenges and opportunities.

That takes time, exceptional service — and trust. Only clients who have the highest confidence in their advisers will commit resources to mergers and acquisitions, capital raising, and other financial advisory services.

I have a hard time seeing any technology disintermediating the essential relationship between investment banker and client. If anything, AI is going to give financial professionals a formidable tool to deepen connections with existing clients, even discover entirely new ones.

Consider how past innovations have changed banking in recent decades. In my lifetime, advances in technology — from automated teller machines and spreadsheet software programs to chatbots and mobile banking — have allowed us to transact, save and invest far more conveniently and affordably.

As a young investment banker in the pre-Internet 1990s, I used to work with a call list several pages long. I’d dutifully check in with my clients one call at a time. Then came the web, emails, smartphones and high-speed broadband.

I expect these advances, despite their magnitude, may end up paling in comparison to the sea change we will witness with Artificial Intelligence. AI-powered algorithms are already analyzing vast amounts of structured and unstructured data from various sources such as financial news, SEC filings, social media, and company websites to identify potential leads. By analyzing patterns, sentiment analysis, and other indicators, AI can help us better service existing clients.

AI-powered automation can also streamline the process of generating client reports, portfolio updates, and other documentation. By extracting relevant information from disparate sources and generating reports automatically, investment bankers can save time, enhance efficiency, and focus on client engagement and strategy.

What AI won’t change is the need for quality, interpersonal contact with clients. Our business partners seek investment bankers willing to put in the time to acquire a textured understanding of their industries, and the unique management and competitive challenges they face.

Regardless of the technological changes to come, the best investment bankers will deliver sophisticated advice with that human touch. The most important interactions will continue to take place one-to-one — on a zoom call, in a conference room, over a meal, or at an industry event.

Solomon Partners will never be a high-volume, transaction-obsessed investment bank. Our enduring client relationships, as well as our bespoke M&A advisory services, set us apart, and are inexorably tied to our success.

Technology shifts will come and go. Relationship banking will always remain the essential feature of our firm’s DNA.

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