GenAI has exploded onto the boardroom agenda – nearly two-thirds of the UK business leaders taking part (66%) in PwC’s 27th UK CEO Survey believe that GenAI will increase competition in their industry over the next three years. A similar proportion (64%) expect GenAI to increase the efficiency of their workforce over the next 12 months and 57% believe it can improve products and services.
But as research carried out by PwC Strategy& highlights, the value potential and impact of GenAI varies markedly from industry to industry. Moreover, unlocking the value requires guidance, trust and control as part of a human-led, tech-powered response.
Sizing the prize
So what is GenAI? GenAI generates text, code, images, video and other content (‘outputs’) from data provided to it, retrieved from the internet or defined and siloed datasets (‘inputs’) in response to user prompts.
For private markets’ operations in particular, the high potential use cases include due diligence questionnaire (DDQ) preparation. Rather than tying up analysts for weeks, GenAI can rapidly trawl through relevant documents, performance reporting and past responses to prepare answers ready for review by senior investment professionals. Clearly, the results are faster and more efficient. But where GenAI-enabled operations become potentially game-changing in private markets is in providing the analytical capability and response at scale needed to open up the industry to retail investors, enabling them access to detailed market and company analysis in real time.
GenAI-enabled portfolio monitoring could be equally ground-breaking. The illiquid nature of private markets makes it hard to update valuations. But the speed at which GenAI can work through multiple portfolio company-related data points across market insights, financial statements and performance metrics is sure to be a catalyst for accelerated investor reporting.
And these are just some of the many use cases stretching from talent acquisition to the drafting of legal documentation.
Taking control
But before we get carried away, we need to remember that GenAI is just an enabler rather than the silver bullet that some claim it to be.
The obvious limitation is source data – as ever, rubbish in means rubbish out. As this is a continually-learning machine, you not only need to make sure the initial data is up to scratch, but also keep prompting, checking and re-prompting as part of a continuous cycle of input and output.
Underpinning all this is governance and trust. If you don’t trust the outputs, why should your investors? While the ‘black box’ inner workings may be hard to monitor, you can still check the inputs and outputs for errors and biases.
The way forward
So how can you equip your business to make the most of GenAI? From our work with clients, we’ve identified five ‘no regrets’ foundations:
1. Frame your strategy
Understand the implications for your organisation, to inform and define your strategic response.
It’s important to cut through the hype to determine how your particular business can benefit and how this would support your overall strategy – augmenting reporting or moving into retail markets, for example.
2. Take control
Get your organisation’s governance into shape, to build trust and transparency in your AI use.
Key priorities include training your teams on what the technology can and can’t do, as well as defining the framework and parameters for the appropriate and responsible use of publicly available tools.
3. Target investment
Identify and prioritise the most valuable use cases to target and optimise investment.
GenAI can do so much, it can be hard to know where to focus. So a good starting point for identification and prioritisation is to gauge the value of a process such as DDQ, the number of hours you currently spend on it and the data available to support it. You can then look at how GenAI can help you to not only do this in less time and at lower cost, but also better.
4. Lay the platform
Power up your tech infrastructure and data to accelerate value delivery.
Cloud modernisation can provide an efficient and scalable foundation for infrastructure modernisation. This includes providing an accessible and scalable entry point for GenAI capabilities and enabling your business to collect, collate and analyse data from across your organisation and its value chain.
5. Bring your workforce onboard
Get your people ready and instil the right culture to support them on this change journey.
This requires workforce engagement and buy-in as well as upskilling. It’s notable in particular that Gen Z millennials taking part in the latest PwC Channel Islands Workforce Hopes and Fears Survey are much more likely to be positive about the impact of AI on their work than older generations. But you can win over employees by demonstrating how AI can not only eliminate some of the needless drudgery in their work, but also help them to make better use of their talents.
Let’s talk
If you’d like to know more about how GenAI could benefit your business or exchange views on other areas impacting private markets operations, please feel free to get in touch.
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