UBS is teaming up with a Hong Kong-based artificial-intelligence company called Lynk to provide its investor clients with tailored access to industry experts.
Damien Horth, UBS’s head of new business initiatives for the global research team, also based in Hong Kong, says the collaboration is part of a broader strategy to help its equity research add more value.
UBS traditionally provides all manner of research to pension funds, mutual funds, hedge funds, institutional asset managers, and family offices.
Horth says the Lynk partnership will help it better target new client segments, such as private equity, venture capital, and management consultants.
The partnership goes both ways: Peggy Choi, CEO and founder of Lynk, says the company will benefit from UBS’s global distribution, as well as giving its own users access to UBS research.
Lynk recently closed a $24 million funding round led by Brewer Lane Ventures and MassMutual Ventures, with additional participation from Alibaba Entrepreneurs Fund, bringing the company’s total funding to $30 million.
For UBS, the Lynk deal is meant to help it stay on top of increasing pressures on sell-side research. Regulation, particularly Europe’s MIFID, has forced banks to unbundle research from trading and execution since 2015. That has required banks to justify the economics of research as a standalone business.
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Meanwhile, technology continues to drive down costs and time involved in accessing information about companies or sectors and making calculations. Although this frees up analyst time, and lets them bring insights much more quickly, it also makes it easier for tech-based competitors, and it calls into question the value-add of many human analysts.
Horth says the impact on the industry has not been as bad as people feared five years ago, although banks have shed analyst jobs, particularly in Europe. But these changes have also prompted banks to figure out how research can help investor clients stay ahead of the curve.
UBS revisited its products in the runup to MIFID, but it is now adapting more tech-based solutions. It launched the UBS Evidence Lab, to source and compute alternative data sets. Last year, it introduced a China-themed research product.
A Google for expert networks
This year’s new initiative is the Lynk collaboration, which is meant to help UBS combine its proprietary research with giving investors access to experts in any area.
“Demand for experts reflects the increased complexity of both the economic environment, and the geopolitical environment,” Horth said.
Lynk is a directory with 840,000 industry experts worldwide, but it uses A.I. search tools to sift through a client’s request to find exactly the right person, making it a more niche sort of Google or Baidu.
“The challenge is matching,” Horth said. For example, an investor interested to know more about electric vehicles in China would still face hundreds or more of experts.
“We use data services to narrow that down to the specific need,” Horth said of the Lynk product. “Is your question about batteries, or the drivetrain, or do you want to speak with a product expert? What question are you trying to answer?”
The two businesses are also referring clients to one another, with revenue share agreements.
“We see potential for other types of collaboration,” Horth added.
His biggest KPI to determine the success of the partnership will be client feedback. “They’ll express whether it’s helpful,” he said.
UBS global research analysts already have access to the Lynk network while UBS Global Markets will introduce Lynk solutions to UBS’s institutional clients.