The use of artificial intelligence has as much capacity to benefit private as public markets, according to Karen Sands, the chief operating officer for private equity of the US-based investment firm Federated Hermes.
The more secretive aspects of private equity, compared with public markets, has fed a common but inaccurate perception that private equity is more conservative in embracing technology compared with public markets.
Speaking at the inaugural FundsTech Forum in London today, Sands told delegates that reporting, the onboarding of clients, anti-money laundering, know-your-client and marketing were all aspects of private markets that could benefit from the greater use of technology, as is the ability of AI to identify data from documents and discard irrelevant information.
“Part of the challenge with private equity, and the clue’s in the name, is that unless you’re in the sector, it’s quite hard to assess how far AI is being used, whereas in public markets it’s more open,” Sands said.
“AI lends itself very well l to tasks that are data heavy and require a lot of manual input. It will allow us to assess information, assimilate information and produce summaries much quicker.
“In turn that allows our employees to work on more value-added tasks. It will augment the way that we work, as opposed to replace human intervention. And I think that’s because of the way that humans have the ability to understand emotion.”
On the issue of standardisation, Sands said that, similar to some of the taxonomy of ESG reporting, standardising terminology would be helpful in private markets by introducing greater consistency.