When it comes to artificial intelligence (AI), there is something of a revolution taking place on Wall Street.
After years of speculation and countless false dawns, AI is finally being adopted as a cornerstone of future strategies (or at the very least as an insightful research tool). Even large-scale operators such as Goldman Sachs and Two Sigma are investing heavily in the development and deployment of AI, with this technology now representing the future of the financial marketplace.
In this post, we’ll look at the revolution in closer detail, and ask how it is likely to change Wall Street and the financial marketplace as a whole.
The Rise of Machine Learning and its Impact on the Market to Date
In the UK, Man Group Plc were one of the first firms to fully embrace AI. In fact, the company has around £13 billion in hedge funds that are managed by machine learning software, while it’s estimated that AI will be a key driver of the business within a decade.
Much of this has to do with the pace of technological advancement, which has increased computing power and data generation on a significant scale since the turn of the century. As a result, trading platforms and wealth management firms are able to collate and analyse larger swathes of data than ever before, and leverage this as a foundation to enact effective AI strategies.
In truth, AI is not a new concept in the world of financial market trading. Online trading platforms have grown to include a large degree of automation, enabling investors to execute multiple orders simultaneously whilst also minimising risk with tools such as stop losses. This type of advanced and smart software has revolutionised currency trading in particular, empowering individuals to leverage data and technology to optimise profits regardless of the market conditions.
How will AI Continue to Impact on Wall Street?
In this respect, formative AI technology and automation has helped traders to take human emotion out of their investment decisions and instead rely on accurate and carefully accumulated data sets.
If the AI revolution continues as expected, however, it is also likely to have a devastating impact on job creation within the financial market. According to estimated projected by consultancy firm Opimas (who canvassed the opinion of numerous financial companies from across the globe), up to 90,000 jobs could be lost in the field of asset management.
Fund managers, analysts and administrative staff would be at the most severe risk, as AI is reaching a stage where it can effectively replicate many of these functions.
In total, the survey estimated that up to 300,000 financial market jobs will be lost to AI worldwide by the year of 2025, creating a progressive but scarcely recognisable industry.
The Last Word
In many ways, the emergence of AI in the financial market is long overdue. After all, it was back in 1950 that Alan Turing developed the so-called ‘Turing Test’ for recognising machine intelligence, while the development of smart technology has created an entirely new level of innovation.
Going forward, the capacity of machine learning to eliminate emotion and identify investment opportunities that exist beyond the reach of humans will ultimately make it invaluable to the financial market. The only issue here will be the human cost, as the potential loss of jobs is something that continues to create resistance in the field of AI.