New regulations, new technologies and evolving commercial demands could be reducing demand for investment bank research and speeding investor uptake of artificial intelligence (AI) solutions.

This is according to new research from Greenwich Associates, which found that around 70 per cent of portfolio managers, CIOs, analysts, and other investment professionals expect MIFID II regulations and other factors to result in the further “unbundling” of investment research from trading—not only in Europe, where the rules took effect earlier this year, but around the world.

As the market for investment research evolves over the next five to 10 years, Greenwich Associates believes that investors will rely more on proprietary in-house research. In addition, many investors expect to increase their use of research from independent providers, and to integrate alternative data sources more tightly into their investment process.

Those in-house research processes will increasingly include artificial intelligence. Although only 17 per cent of study participants are currently using AI as part of their investment process, more than half expect to increase the level of AI integration and recruit additional internal expertise, and 40 per cent expect to increase budgets for AI.

“Due to these and other changes, approximately half of these investors expect to decrease their reliance on investment bank research,” said Richard Johnson, vice president of Greenwich Associates market structure and technology. “Data science skills and AI expertise are replacing advanced degrees in quantitative finance as the most in-demand qualifications at large investment organisations.”

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