Mint Explainer: How AI is transforming investment banking
How will AI change the business model?
The reduction in turnaround time and the potential automation of processes raise questions about the billable value of bankers and the sustainability of advisory fees. Samir Bahl, chief executive of investment banking at Anand Rathi Advisors, argued that the business model will withstand the automation of execution tasks. “Clients don’t pay advisory fees for the back-end turnaround time of execution,” he said. They compensate banks for deal origination, marketing and relationship leverage. “Even if absolute fees moderate over time, improved productivity can ensure that profitability remains intact.”
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