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What investment bankers can learn from chess

Adrian CrockettAdrian Crockett

You think this is going to be about how chess can teach critical thinking, don’t you?

Nope.

And nope, this isn’t a meta statement about critical thinking1 and what may or may not have been your initial reaction to reading the headline. That’s far too confusing and this is Fix The Pitch, not The New Yorker.

Instead, it’s about how professional chess has been forever changed by the supercomputer and what this means for investment banking.

In 1997, Russian Grandmaster Garry Kasparov lost a highly publicized chess game to IBM’s supercomputer, Deep Blue. At the time, Kasparov was considered the best chess player in the world, and the machine’s victory caused Newsweek to proclaim, “The Brain’s Last Stand” in its coverage of the match.
A year later “advanced chess”—a human and a computer working together—made its entrance.

And something interesting happened.

The combination of a human’s flexible and reactive brain with a computer’s vast analytical processing and memory storage changed the game. Grandmasters no longer had to memorize moves, but instead unleashed their creative sides, evolving the game from one of rote memorization to creativity.

As advanced chess continued, a pattern emerged:
Supercomputer > human
Supercomputer > regular computer
Supercomputer < human + regular computer

Something else interesting happened, too. The people who did the best partnering with a regular computer weren’t actually the best chess players, but they were the best at effectively segmenting tasks between themselves and the machine. In other words, they were the best at seamlessly integrating technology into their workflow.

This is the missing link in investment banking today.

Investment banking has a long history of segmenting tasks, where the most efficient resources complete various portions of projects. In the past, it’s relied heavily on other humans to do this; it’s time to unleash technology.

If effectively leveraging machines can turn good chess players into great ones, I believe the same holds true for investment bankers. Good bankers can become great ones. Technology can reduce task load and generate more powerful and compelling content. In turn, the quality of client coverage will dramatically increase.

A knowledge management platform, something you may have heard from management consultants, is a powerful first step toward this. While the majority of platforms we’ve seen to date lack important functionality or completely misunderstand the investment banking workflow, the concept holds a powerful promise.

If bankers could run a search query to find high-caliber answers for a myriad of topics and questions, they would be freed from performing tasks of rote memorization. Instead, they could focus on the creative, analytical side of the task, reviewing the analyses and crafting it into value-added client materials.

Building and effectively leveraging knowledge management platforms would be fruitful for everyone. Clients would get a faster, better-tailored answer, with quality higher than that of today’s average pitchbook. And with more bankers able to spend additional time executing deals, building relationships, and honing critical skills, we’d see an increase in the finance equivalents of Grandmasters.

Do you think a knowledge management platform would help you? Where else do you think technology should be used in the banking process? Let me know at adrian@pellucid.com.

  1. Just a note: I do agree that chess can help develop critical thinking skills which is why I’m introducing it to my toddler—although she is more interested in eating the pieces.

Find out how Pellucid Analytics’ content platform can take on some of the banker burden. Visit www.pellucid.com.

CEO & Co-Founder of Pellucid Analytics. Former Credit Suisse group head with nearly 20 years on Wall Street. Melding design, analytics, and tech to produce amazing client-ready content in minutes.

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