AI in the financial world. What to expect?

Author: Petros Kalaitzis

Artificial intelligence (AI) is omnipresent. And it is slowly conquering the trading world too. We don’t know what the future holds, but there are clear patterns that we can base our predictions on. Here they are.

AI-based consulting

One of the goals of AI is to save time by taking over the tasks that the algorithm can do faster and better than humans. That’s why we are starting to see so many AI-based bots serving as consultants to traders. It’s unlikely that the algorithm will completely take over and kick all investment consultants out of the market. Yet, it has the potential to bite off a large piece of the pie.

And it is not surprising because consultants rely on their knowledge, experience, and analytical skills to do their job. AI can scan and analyse enormous amounts of data within minutes and run more scenarios than is humanly possible. It can scan countless news articles and experts' posts to identify how the market feels about a certain stock and whether or not it's worth pursuing.

This means that human professionals must reinvent their services to retain their clientele and attract new traders. How they’ll do it is yet to be determined.

Risks to brokers

High-frequency trading is achieved through algorithms to automate research and decision-making. With AI, this trading strategy can go to a whole new level. There is also the risk that it could be misused by traders who may cause issues not only to brokers but also to entire markets if enough of them do it with high volumes.

Like any disruptive innovation, AI can be a blessing and a curse. Regulators will have to step up and introduce guidelines and laws faster than usual because AI expedites everything, and there is no time to waste.

Customer service to become AI-based

We already see this happening all around us. Half the time you call a company, you speak with an AI-powered robot. And it only makes sense for the business to outsource customer service to a machine that can handle most of the queries equally well or better than a human representative.

Having said that, it’s unlikely that personal and customer success managers will become redundant. In this new world, they will focus more on a selected number of clients they are working with, and their job will possibly become more strategic and niche.

The ethics of AI

One of the serious questions that come up in AI conversations is the ethics of using the algorithm. It can make our lives better, easier, and more fulfilled, but there has to be a line that companies and societies won’t cross when using the algorithm. Just like one of the points we mentioned earlier – traders need to be cautious of how their use of AI influences everyone else in the market. On the other end, brokers need to be careful with how they collect and use the data in their business.

We all need to participate in a big discussion to build a sustainable future for the trading world.