Charting the Course: Fintech and Investor Relations in 2024
Anticipating the Role of AI, Data, and Regulations in Shaping Next Year
As we close the chapter on 2023, a year that witnessed extraordinary shifts in fintech and the investor relations landscape, the Stakeholder Labs team is excited and grateful for the opportunity to participate in such a dynamic market and moment in time. This past year was characterized by several remarkable transitions and events, such as the digital network induced run on Silicon Valley Bank, the rise of AI as a critical business tool within capital markets, backlash against ESG and DEI initiatives and new regulatory proposals and enforcement actions that are transforming the individual investor landscape. These developments, driven by technological innovation and evolving market demands, have set the stage for 2024 to usher in transformations in investor relations practices and our capital markets.
Symbiosis of AI and Human Insight in Investor Relations
The investor relations landscape is poised to undergo a significant transformation, driven by the increasing integration of AI tools. This evolution is not about replacing the nuanced expertise of Investor Relations Officers but rather enhancing their capabilities through technology. Echoing this sentiment, Kimberly Esterkin, Vice President of Investor Relations at ASGN Incorporated and Director on the NIRI National Board of Directors, provides an insider’s perspective:
2024 is around the corner, and it still feels that much is unknown about the future of our economy. One thing is for sure, however, and that is the two letters ‘AI’ are here to stay, and investor relations will be forever changed by its implementation. AI will not replace investor relations officers – instead in the coming year, IROs will become more efficient by leveraging AI tools. While tasks will be streamlined and certain areas of the IR role will be enhanced by the use of large language models, it is my opinion that the IRO will make an even stronger mark for herself in the world of finance in 2024, showing that our unique combination of left-brained / right-brained intelligence is not replaceable and that we need that human touch of the investor relations officer to make AI tools truly powerful.
The Rise Proprietary Data's Crucial Role
The escalating significance of proprietary data, particularly in light of the rapid advancement of AI, is an important development to watch across all industries next year. In the realm of IR and capital markets, this translates into the need to acquire and harness shareholder data for more measurable and actionable strategies. This could include personalized shareholder communication, predictive analytics for investor trends, and a deeper understanding of the impact of market events on investor sentiment. The key here is the utilization of AI not as a mere tool for data processing but as a strategic asset that is fed and enhanced by a company’s unique data reservoir, which will provide IR professionals with a competitive edge. Stakeholder Labs’ product Roundtable is a critical starting point for companies to acquire proprietary shareholder data and seamlessly integrating into their data technology stack.
Companies Valuing Investors Over Traders
With more market volatility expected in 2024, there will be increasing value placed on acquiring long-term investors over short-term traders. The stability and commitment offered by dedicated investors are becoming more recognized as critical components of a company's financial health and market reputation. Similar to the approach companies take with their customers, we expect to see IR teams investing more in understanding who their shareholders are and the key drivers for increasing loyalty and reducing churn. This is not merely about attracting capital but about building a stable base of supporters who believe in the company's vision and strategy and have the ability to take action in the real-world.
I think there's not one simple way to define retail investor because you have retail traders and then you have retail investors. And they're two completely distinct sort of ideologies in terms of when you talk about retail.” - Anthony Denier, CEO of WeBull
Direct Communication and Digital Strategies
Direct communication and digital content strategies to build more loyalty among shareholders will become increasingly normalized among public companies. In 2024, we foresee a significant shift towards utilizing digital platforms not just for communication, but for building and nurturing relationships with shareholders. This trend is about leveraging digital tools to create more engaging, informative, and personalized content and using social media, webinars, podcasts, and other digital mediums to convey information and create a sense of community among shareholders. Companies that excel in digital storytelling and provide regular, transparent updates will likely see stronger shareholder engagement and loyalty.
Joey Swillinger, co-founder & CEO of Allbirds ($BIRD) sat down with investor / media personality Harry Stebbings for a 60 minute dive deep around the Q3 earnings call
Enhanced Regulation and Compliance
The regulatory landscape for capital markets and investor relations is likely to become more complex as the SEC considers new rules that regulate brokers’ ability to leverage predictive analytics and CFPB seeks to implement ‘open banking’ data sharing and protection guidelines across the US financial system. With many brokers leveraging user data as a key revenue driver, the role financial institutions play as the conduit between investors and companies is poised to evolve. This shift in regulation could lead to a greater emphasis on transparency and accountability within the financial sector, as institutions will need to adapt to a more stringent compliance environment. Stakeholder Labs is excited to be working with industry groups such as the Financial Data Exchange to develop and implement data sharing and protection standards to help advance our capital markets forward.
As we step into 2024, emerging from a transformative 2023 in fintech and investor relations, several key predictions stand out. AI is expected to significantly enhance the capabilities of Investor Relations Officers, not replacing but augmenting their roles with greater efficiency and strategic insight. The focus on proprietary data will intensify, with companies leveraging this asset for deeper, more personalized investor communication and analytics. This shift will be crucial in navigating the anticipated market volatility and understanding investor behaviors. Direct communication and digital engagement strategies are set to become more prevalent, with companies increasingly using digital platforms for more engaging and effective shareholder interaction. Finally, the evolving regulatory landscape, with new rules and guidelines, will likely prompt companies to adapt and innovate in their approaches to investor relations. Overall, 2024 promises to be a year marked by technological integration, data-driven strategies, and a renewed focus on building strong, informed investor relationships. At Stakeholder Labs, we are actively utilizing technology to assist public companies in quickly adapting their investor relations strategies to these evolving dynamics. As we approach the new year, we’re excited for the opportunity to look back on our predictions and evaluate the impact we've made in a year's time.