Sunday, May 8, 2016

How Will Artificial Intelligence Impact the Finance Industry?

  • Last week, at the Milken Global Conference in Beverly Hills,  Daniel Nadler, chief executive of finance analytics firm Kensho Technologies, Inc.  said “Analysts, young associates, vice presidents — anyone whose job is moving a column of data from one spreadsheet to another is going to get automated  … Those people are not going to have jobs.”
  • Also,  David Siegel, co-founder of quantitative hedge fund Two Sigma said “Most people in the bulk of the job market are not involved in super-high-value jobs … They are doing routine work and tasks and it’s precisely these tasks that computers are going to be better at doing,” 
  • Separately, a Financial Times article said that “Sentient Technologies, an artificial intelligence company, plans to open its experimental hedge fund using “evolutionary” algorithmic trading to outside investors as early as this year.” Antoine Blondeau, the firm’s chief executive officer said the asset management industry’s “transition will be slow. But at some point it will become a situation where the question will be whether one machine can outdo another machine, not whether the machine can outdo a human.”
  • Finally, in “Ghosts in the machine: Artificial intelligence, risks and regulation in financial markets”, a survey of 424 executives from financial institutions and fintech companies by Euromoney and Baker & McKenzie, it stated that finance was  “an industry rapidly seeing the potential benefits of AI, while being increasingly concerned about risk and the ability of regulators to keep pace … The most dramatic changes brought about by AI and machine learning within three years are expected to be in the areas of provision of creditasset managementtrading and hedge funds.” 
MY TAKE
  • Artificial intelligence/machine learning will automate and disrupt many aspects of the financial industry, as well as other professional services – including accountinglaw and education.
  • Because information technology systems are susceptible to “garbage in - garbage out”, safeguarding against poorly designed algorithms will be important.
  • While many technology businesses should benefit from the AI trend, the accelerating pace of

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