AI is Set to Change the Investing Landscape
Artificial intelligence and machine learning have been some of the most trending technological niches of recent times, and with good reason. The release of the GPT series large language models and ChatGPT lead to a major recalibration of general attitudes toward these technologies. In the ensuing months since its launch and success, ChatGPT has grown to a massive degree and roped in over 100 million monthly users.
The rise in popularity of OpenAI’s GPT iterations has kickstarted what is evidently a pitched competition between numerous companies to put out their versions of emerging AI technologies. As tech rivalries and the race to create faster, better, and more efficient artificial intelligence becomes heated, its foray into numerous sectors of human activity is inevitable.
Unsurprisingly, finance too will not remain untouched by AI’s pervasive reach in today’s world. Stuart Russell in his book Artificial Intelligence: A Modern Approach, highlights the importance of natural language processing (NLP) for communication. NLP is a breakthrough that has allowed computers to understand human language better, and when it comes to investing and securities, clear communication is essential.
Alongside artificial intelligence and the extensive data sets of language models, big data and analytics is gaining a concerted push. This holds specific implications for the niche of securities and investing as automated computing protocols might just be able to decipher numerous patterns in large chunks of data, helping inform investor decisions.
While the arrival of chatbots has rekindled the discussions surrounding machine learning and AI, the potential for the booming technological niche is vast in the financial sector, given that companies and individuals are perpetually in need of pointed and objective investment advice based on fact.
We explore the possibilities artificial intelligence holds for the investing and finance landscape as the world propels toward rapid transformation in technologies amidst a period of economic flux.
Why can AI be Useful in Investing?
The world of investing and finance has transformed over the years and has become increasingly reliant on technology. This reliance is fueled by consistent growth in computational capabilities alongside an increased focus on data and analytics. Moreover, global financial markets are dictated by geopolitical, economic, and natural events alongside their impacts on the mass psyche.
Apart from the obvious element of bias and human emotion, investing is further complicated by the extent of research and attention to detail when speculating the potential domino effect created by global happenings. This is where AI can be of special interest. Artificial intelligence’s primary purpose has always been to supplement human thought and effort instead of replacing it entirely.
Machine learning (ML) protocols and other intelligent systems are capable of observing and identifying market signals as well as skimming through voluminous amounts of data in short periods from a neutral standpoint. This function of reducing cognitive load on human overseers allows financial advisors to remain focused on performing crucial tasks such as investment decision-making and the monitoring of more nuanced assets.
Apart from saving time, AI might also ease the pressure on wealth managers and advisors, helping them remain committed to their duties. With a vast array of signals, trends, and impending economic events, AI can also be a great preemptive tool that helps analysts predict periods of crises and growth.
Besides predictions and analysis, AI tools can also change the way assets are managed overall. From tracking growth to allocating funds adequately, fund management has become progressively more convoluted.
A major area where machine learning algorithms can be deployed involves the detection of key global signals that are significant to investors. Correlating data points in vast blocks of information is something ML protocols can be primed to do, allowing fund managers to not only assess developing signs in the market but also identify assets that might have a better shot at growth.
Furthermore, AI can also be used to enhance the relationships between fund managers and their clients. Chatbots and other forms of responsive tools can be utilized to streamline the initial process of interactions and verification, allowing managers to remain focused on their tasks at hand.
Clients can also have easier and more secure access to their information through AI-supported platforms that can emphasize ease of usage and navigability on the platform. Such intuitive tools can be improved further by utilizing users’ feedback on the platform. The same algorithm can also be deployed to track overall portfolio performance, optimizing the fund manager’s decisions with a specific focus on each investor’s unique profile.
Integrating Human and AI Expertise for Better Investment Outcomes
Leveraging artificial intelligence in fintech and investments relies on AI technologies supplementing existing human frameworks and systems to truly enhance outcomes. AI’s primary focus will remain centered around helping investors make better decisions and choices in their respective investment journeys apart from enhancing existing software systems and architecture.
Despite the extensive data sets AI and ML models are trained on, there might always be situations and patterns that might fall outside of these tools’ training protocols. This creates a potential vacuum and might lead to instances of error and misjudgment. Human intuitiveness and expertise can offset these limitations and extend the overall effectiveness of AI technologies in finance.
Moreover, AI must only be an accessory that provides decision-makers with essential information and data so they may act on it based on their discretion. Risk management with AI tools can be a bonus, as these technologies are capable of providing insights into individual risk quotients on each asset.
Similarly, these insights can also be customized based on client requirements and their respective portfolio goals. This might be of significance as markets can quickly become agitated and volatile with various movements that involve government regulations, investor sentiment, and macro & microeconomic markers.
Finance experts coupled with their AI assistants might just be able to revolutionize navigating tough markets with both technology and a human touch.
AI and the Future of Investing
The dawn of artificial intelligence tools in the investing sphere is bound to mitigate risks and provide timely alerts and insights to both individual investors and fund managers. Machine learning protocols can help with the identification of key markers, allowing investors to rely on pinpoint data based on real-time information. Not only does this provide help with long-term insights and reliable metrics, but it also helps investors react to market changes quickly, allowing sufficient leeway to navigate choppy markets.
Objective analysis of data and investor sentiment is another benefit of autonomous systems which when coupled with subject matter expertise can provide the best outcomes for investors. As these technologies grow to encompass virtually every sphere of human activity, it is only natural that finance and investing, too, shall come under its sway.
Apart from maintaining a keen watch on these crucial developments in the world of technology, exploring opportunities with the help of these intelligent systems will slowly take center stage as AI is scaled up and improved over time.
Author bio: Sophia is an online ESL/EFL instructor and a passionate educator who rigorously follows Artificial Intelligence and the way it is set to change the world order. She found her true calling — teaching — while she was juggling writing and a 9-5 desk job. Her active online presence demonstrates her strong belief in the power of networking. If you want to connect, you can find her on Facebook, Twitter, Medium, and her blog Essay Writing and More.