UBS Uses Data-Science Tool to Fight Activist Shareholders – Business Insider
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Data scientists are all the rage on Wall Street these days, and investment banks are looking to snap up the tech-savvy talent as quickly as they can.
At UBS, Ronald Jansen leads the firm’s global-banking data lab. The team sits within the its investment-banking division, and is dedicated to equipping bankers with cutting-edge information as they advise clients on mergers and acquisitions and public offerings.
„Software and data science and technology — they’re really good at supporting the analytical side of things,“ he told Insider, but cautioned that they’re not a replacement for tried-and-true human judgment. „You need to put these two things together in order to be really effective as an advisor.“
One brainchild developed by the group is UBS-Guard, a software program that Jansen’s team launched in the summer of 2020.
The tool is directed at helping public companies fend off activist investors. It takes into account more than 320 million individual data points and has recorded over 5,000 past activism campaigns to help calculate the likelihood of shareholder activism, Jansen explained.
The program’s name is an acronym for „Global Utility for Activism Risk and Defense.“ The tool analyzes companies‘ fundamental weaknesses that activist shareholders might target, giving management teams a warning so that they can implement defensive strategies proactively.
„In one example, our activism team leveraged UBS-Guard to identify the drivers of potential vulnerabilities for a client,“ Jansen said, describing the tool’s utility, „and then test a range of ‚what if‘ scenarios that would reduce the likelihood of being targeted by an activist.“
Jansen said that some of the best sparks for innovation actually come from senior bankers who approach his developers to request solutions to clients‘ problems.
Some of his team are actually former investment bankers themselves, while others are data scientists and software engineers straight out of college. The global-banking data lab’s goal, Jansen said, is to harness data science and predictive analysis to „systematically identify deal opportunities, connect with clients in innovative ways, and help our bankers work more productively.“
„From there we form cross-functional teams that tap both into the skills of our data scientists and the expertise of our bankers,“ he said, adding that the success of UBS-Guard had incentivized more bankers to engage with his team.
UBS‘ senior dealmakers aren’t alone in warming to data. Other banks like Goldman Sachs and Citi are staffing up in the hot arena, and looking to data and software engineering to give their clients a leg up.
A recent Refinitiv survey of senior banker found that 46% of respondents hoped the adoption of new tools and data could lead to better deal execution, and 66% said they hoped that these resources would lead to improved data quality and accuracy in dealmaking models.
„The world around us is constantly changing,“ Jansen said. „We need to stay ahead of the curve.“
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