Looking Ahead: IR 2.0
January is a month to begin fulfilling resolutions- for the months ahead and for the longer term. InspIR has been paving the way for what we call IR 2.0 – a paradigm shift involving heightened innovation and disruption of the future of investor relations.
In a world where companies are proactively and aggressively vying for financial community attention, taking the status-quo approach is no longer enough. Issuers that can anticipate and embrace change will not only survive but will thrive.
IR 2.0 isn’t just some catchphrase. It’s a commitment to staying ahead of the curve. As the business landscape evolves, InspIR’s approach to investor relations has as well. We’re seeing unprecedented technological advancements, and the start of an era where Artificial Intelligence (AI) is further enabling data-driven decision-making and digital communication that drives IR strategies.
As our first newsletter for 2024, this sets the tone for the year ahead and will continue to resonate throughout InspIR’s work and related communications.
AI as a Catalyst for Data-Driven Decision-Making
We saw AI, specifically ChatGPT, explode onto the headlines in 2023. Interest around commercial uses for AI, which in 2023 was largely concentrated within the technology space, will continue to drive widespread deployment of generative AI in 2024- for business functions in general and within the IR and communications space in particular. AI and machine learning clearly can have important IR benefits, enabling quick and efficient analysis of vast datasets to gauge and forecast market sentiment, identify emerging investor trends and even to predict activist investors’ next move to inform corporate decisions and responses. There also will be exciting opportunities for AI to better support IR professionals.
Imagine having an “AI agent”: a virtual IR assistant trained using algorithms to ensure full compliance with regulatory requirements and that is able to respond to your investor inquiries, 24/7. This digital IR assistant would share issuers’ publicly disclosed information with benefit of lightning-speed data analysis, organize your investor calls and meetings and take on any other mundane IR tasks that today take your valuable time away from other more important (and interesting) things. This idea – based on this concept created by Bill Gates – could empower IROs, enabling their roles to be more strategic by focusing on what they (and humans in general) do best: build and maintain engaging relationships.
We’re also seeing how IR teams can leverage AI to anticipate investor preferences and needs, to quickly and efficiently analyze behaviors and ensure communication is tailored for your respective audiences. This enhances and optimizes the overall investor engagement to share insights uniquely aligned with an investor’s investment mandate, create personalized reports and even customize roadshow presentations.
Digital Communication: Leveraging Technology and the Virtual Universe
Covid-19 was an important innovation driver for IR, encouraging new ways for management and IR teams to maintain contact with various constituencies. These include virtual roadshows, Investor Days (which today have become hybrid), and are now evolving to fully immersive virtual events. Imagine presenting your company’s financials or hosting a site visit using virtual reality (VR) or augmented reality (AR). This immersive technology could revolutionize and profoundly enrich and broaden your interaction with the financial community, to provide a much more dynamic, engaging and interactive experience.
IR apps, podcasts, and company-specific social media channels are other mainstream ways IR teams maintain active communication with the investment community, as well as platforms for IROs to gauge investor sentiment. These tools’ analysis of social media, investor forums and news outlets provide a holistic view of how a Company is perceived publicly, enabling IR professionals to address concerns proactively.
Beyond the Technological Innovation
You’d think the most rational financial decision is one that maximizes profits, but that may not always be the case. Behavioral finance, which examines the psychological influences and biases influencing investor behavior, is increasingly important in IR. It recognizes that investors aren’t always rational and that their decisions are influenced by many psychological factors. Understanding these enables IR professionals and their advisors to anticipate and manage the financial community’s reactions, particularly during periods of market volatility or corporate change.
A related understanding can increase communications strategies’ effectiveness, improve investor expectations management and provide deeper insight into market movements. IR teams can again tailor their approach to address biases by incorporating insights derived through behavioral finance, fostering more effective investor engagement to create more stable and positive relationships with the investment community.
Looking Ahead with Confidence
IR 2.0 also isn’t a distant concept- it’s a reality InspIR is actively shaping. The ability to be agile, innovative and adaptive remains crucial. Staying ahead of the curve, embracing technological advancements and aligning with emerging trends will pave the way to a future where investor relations is not just a function but a strategic driver of success.
These are just a few initial thoughts on what we can expect in the years ahead and, more importantly, what IR teams should be thinking about when planning for the future. We’ll continue to share broad perspectives from IR professionals and experts throughout the year through our InspIR Insights to build our futuristic canvas together.