A recent WSJ article about a private equity firm using AI to source investment opportunities by Laura Cooper presages a larger challenge facing employees and employers: AI tools do “the work of ‘several dozen humans’” “with greater accuracy and at lower cost.” In the competitive and employee-dense financial services sector, AI tools can provide a competitive advantage.
Ms. Cooper cites San Francisco based Pilot Growth Equity Partners, one of many of a growing number of equity investment firms to utilize AI. Pilot Growth that has developed “NavPod’ a cloud based deal-sourcing and workflow tool” that displaces the need for employees to “comb through and cold-call” potential leads involved in deal sourcing. While use of AI in this context could lead to some amount of job displacement, the article also notes that 90% of the work involved in deal sourcing can be done by computers, meaning 10% of the work remains with employees. In some sense then, AI can be thought of as a way to augment the tools available to deal-sourcing employees, much in the way Excel was for investment bankers in the 1990s.
When considering implementing AI technology in this capacity, employers should be aware of the impact it can have on employee morale.
There are additional employment considerations as well. As noted in Ms. Cooper’s article, the development of NavPod took two years of programming to create the first version of the AI tool. Because the process took two years it is not unlikely that the company had to hire programmers to perform the coding and bug fixing. There are also the attendant work-for-hire, IP protection, and non-compete issues in employing a programmer to create a niche AI tool, which gives a company a competitive advantage against other PE firms so long as that employee cannot take that knowledge across the street to a competitor.
In short, companies hoping to implement AI-solutions for their workplace should be aware of the host of employment-related issues the use of these technologies can create in the workplace.
We will be keeping an eye on this growing trend and be alert our readers to future financial sector AI developments.