Driving Positive ROI with Artificial Intelligence in Private Debt

  • David Arturi
Lydonia technologies Compass Icon

Artificial Intelligence (AI) is transforming industries by driving efficiency, enhancing risk management, and enabling data-driven decision-making. For financial firms, AI offers immense potential to improve processes and outcomes. But how can firms ensure their AI investments deliver tangible ROI?

This question will take center stage at the NYC Private Debt Deal Connect Summit during the panel discussion cohosted by Opus Connect and Lydonia, moderated by David Arturi, NYM Regional Leader at Lydonia. Ahead of the event, we’re sharing a preview of the conversation in a Q&A format to highlight the key themes.

 

Q: Why is AI so critical, particularly as it relates to competitive advantages?

Speaking about AI is nauseating to most people at this point because it’s all they’ve heard about, but the reality is if you don’t use it properly you will fall behind. Why is that and what does it actually mean to us?

A: Financial Services is and always has been one of the most competitive industries, with each firm looking for unique advantages. Those advantages historically came in the form of proprietary information or top-tier talent, but AI introduces an entirely new element as it can have a truly profound impact on every part of a company, deal, service etc. You can have the best people and the best intel, but if your competitor baked superior technical capabilities into their processes that allow them to access and process new information faster, redirect employee efforts, have insights others don’t etc., they will always be a step ahead of you.

Q: Why do most firms fail with their AI initiatives?

We spoke to leadership at one of the largest private equity firms in the world last week and they told us that only 3 of their portcos had seen positive ROI from their AI initiative, and it was in the single digits. If this stuff is so great, why isn’t it producing the returns everyone keeps talking about?

A: There are a couple of different reasons but the simplest is that most companies are investing in science projects that they then must force-fit use cases into. Whether it’s buying some flashy vertical solution, trying to build a proprietary model from the hardware up etc., most companies are doing everything backwards because of the AI hysteria. The reality is each use case should be addressed with the technology that best addresses the specific need, and you should only use AI if it’s absolutely necessary. AI is extremely expensive so if you start incorporating it just to say you’re doing things with AI, it’s going to be that much more difficult to see a positive return.

In conclusion, the key to driving positive ROI with AI in private debt lies in a strategic, needs-based approach rather than implementing technology for its own sake. Successful AI initiatives start with identifying specific business challenges and then selecting the most appropriate solutions, which may or may not involve AI. By focusing on practical applications that directly address operational inefficiencies or enhance decision-making processes, firms can ensure their AI investments deliver tangible value. As the private debt landscape continues to evolve, those who can effectively harness AI’s potential while avoiding the pitfalls of over-investment or misalignment with business goals will gain a significant competitive edge.

The upcoming NYC Private Debt Deal Connect Summit promises to offer valuable insights into navigating this complex but potentially rewarding journey of AI integration in the financial services sector.

Join us on February 19th for the Opus Connect Private Debt Summit in NYC. Learn more here. Or contact David directly here.

Add to Calendar 12/8/2021 06:00 PM 12/8/2021 09:00 pm America/Massachusetts Bots and Brews with Lydonia Technologies On December 8, Kevin Scannell, Founder & CEO, Lydonia Technologies, will moderate a panel discussion about the many benefits our customers gain with RPA.
Joining Kevin are our customers:
  • James Guidry, Head – Intelligent Process Automation CoE, Acushnet Company
  • Norman Simmonds, Director, Enterprise Automation Expérience Architecture, Dell TechnologiesErin
  • Cummings, CIO, Norfolk & Dedham Group

We hope to see you at Trillium Brewing on December 8 for craft beer, great food, and a lively RPA discussion! Trillium Brewing, 100 Royall Street, Canton, MA