For every public company, investor relations (IR) have been–and always will be–a critical part of their business. However, with the increasing amount of data generated by today's digital-first market, investors are demanding a greater sense of urgency, transparency, and consistency when it comes to receiving shareholder communications. Fortunately, the rise of artificial intelligence (AI), machine learning, and automation has brought about new, innovative approaches to improving the traditional state of IR.
Generative AI, in particular, is one growing trend primed to transform the future of investor relations, enabling marketing and IR teams of all sizes to engage with investors more efficiently, drive their digital investor relations strategies, and achieve their short and long-term goals.
What is Artificial Intelligence?
Artificial Intelligence (AI) refers to the ability of computers and machines to mimic the capabilities that typically require human intelligence, including learning, reasoning, problem-solving, and decision-making, to perform cognitive tasks such as recognizing speech, identifying objects, interpreting various languages, and driving cars.
AI-powered systems analyze data and generate insights to perform specific tasks or predict future outcomes. AI technologies typically rely on machine learning algorithms, which enable them to learn from data and continuously improve their performance over time.
What is Generative AI?
Generative AI is a specific type of artificial intelligence that uses algorithms to generate new, original content. Unlike other types of AI, which are designed to recognize patterns and make predictions based on existing data, generative AI expands the output of regular AI systems to include high-value artifacts, such as images, text, music, and videos, to software code, design, and schematics. Generative AI works by training algorithms on large datasets, which the algorithm can then use to generate new content by combining and rearranging existing data in unprecedented ways or by creating entirely new data from scratch.
The Current State of AI in Investor Relations
With the launch and success of generative AI systems like ChatGPT, which took off tremendously in the second half of 2022, more companies now realize how powerful AI can be for their businesses, especially as a cheaper and more efficient alternative to producing personalized content at scale. Forrester predicts that 10% of Fortune 500 enterprises will generate content with AI tools during 2023, and Gartner reports that by 2025, 30% of outbound messages from large organizations, including quarterly corporate reports, will be synthetically generated.
However, generative AI and the general use of AI in investor relations are, in some ways, at a nascent stage. While the industry is undoubtedly shifting toward digitalized processes, the large majority of IR professionals are still not consistent users of AI-powered tools, especially in their internal day-to-day work. But the same can't be said about many new-age investors, who not only tend to be the earliest adopters of new technologies and trends but are also increasingly using AI and automation to help them decide whether they want to invest in an early-stage startup in the first place.
Ultimately, this sets back marketing and IR teams from delivering the engaging, personalized communication their investors expect and highlights the need for IR professionals to quickly come up to speed to understand how AI can truly transform their investor relations strategies.
Using AI To Change IR for The Better
AI technology has taken the world by storm and is accelerating the opportunities for digital transformation across industries. The increasing power that generative AI brings to IR, specifically, can help public companies improve their investor relations strategies and drive increased shareholder engagement, acquisition, and retention in the following ways:
1. Personalized communication
One of the significant advantages of using generative AI is that it enables companies to personalize their communication with investors, whether through emails, newsletters, automated chatbots, or, growing in popularity, push notifications and SMS. By analyzing large amounts of investor data, such as investment history, preferences, and communication patterns, companies can generate highly targeted messaging campaigns that resonate more closely with investor interests and establish more trusting and engaging relationships with their shareholders.
2. Financial modeling & forecasting
Using generative AI in IR involves creating more accurate and reliable financial models and forecasts that help investors better understand a company's financial performance and make informed investment decisions. Generative AI can analyze a company's financial data, such as income statements, balance sheets, and cash flow statements, to generate financial models that deliver valuable, real-time insights into a company's past, present, and forecasted future operations.
3. Data-driven analysis & decisions
Many businesses today have access to significant amounts of data, and a digital generation of investors means that IR needs to be more data-driven than ever. But analyzing large volumes of data can be challenging, cumbersome, and expensive to manage, especially for companies that don't have the necessary resources or expertise. Through AI and machine learning algorithms, companies can ingest and make sense of their data more quickly and efficiently, providing investors with the insights needed to evaluate a company's financial performance, anticipate future trends, and make data-driven investment decisions.
4. Risk management
Investors are always concerned about the risks associated with their investments. By using generative AI and AI-powered tools, companies can better identify potential risks that prevent increased investments and develop strategies to mitigate such risks through automated analyses across a company's financial data, forecasted operations, market trends, and more.
Unlocking Personalized, Automated, & Data-Driven IR
Fobi's wholly-owned private company, PulseIR, leverages the power of AI and automation to deliver a next-level mobile activation and communications channel for investor relations. Through the wallet pass, businesses can now turn their investors from unknown to known and identify exactly who their investors are, in addition to their investment preferences and interests. With powerful, real-time, and data-driven analytics, IR teams can segment investor groups, use generative AI to personalize shareholder communication such as trading alerts, company announcements, and updates—sent at any time, not just after markets close—and measure and attribute engagement to each specific investor.
It's Only The Start for AI in IR
Many businesses and individuals today may find AI daunting. However, the technology has incredible potential to drive significant innovation and enhanced experiences, which is why many companies are starting to explore how AI can help them improve their investor relations strategies. While IR teams should, of course, be cautious of using generative AI to the extent that their IR communications no longer seem authentic, regardless, AI-powered tools are quickly changing the way public companies everywhere are engaging with their investors.