Role of AI in Investing

Have you ever wondered how Siri works? How computers can play chess with the same mind competency of a human and still win from them? AI is the major contributor to all of this. With technology evolving so rapidly, Artificial Intelligence plays a crucial role in our day to day activities that we often ignore.

AI is widely used in various industries and helping people to ease their process. AI is being used in various industries such as healthcare, manufacturing, education, financial industry and it has also made the trading process a little less complex than before. These days AI is gaining much more traction and people are betting on AI being the future of Investing. Let’s have a look if AI can change the face of investing and help investors evolve too.

Before going forward, let’s understand how AI & Investing works together. Artificial Intelligence can be explained as when a machine can perform all the tasks that a human brain can carry out. That means, AI can also perform tasks that are associated with investing or any other financial services. So, you might be wondering but how is this possible? Let us give you some examples, you might believe it then!

Trading & Markets:

There are trading algorithms that are created using Artificial Intelligence / Machine Learning Techniques. Along with this, it also includes some coding languages such as Python, MATLAB, R, etc. These techniques ease the workload of managers and they don’t need a person to manually perform these tasks on excel. With the help of AI, the system can now process all the past data and track performances faster than a human being. This helps investors to mould their portfolio according to their long term or short-term goals.

Financial Services:

Apart from this, AI can also be used to verify KYC and remember all the relevant information, documents, etc. This helps in reducing the operating costs of a company and reduce the manpower involved. Identification of customers and their documents helps in easing the process of account creation. This feature also helps in providing insurance, house loans, and even credit cards as they can easily process chunks of data and generate results accordingly.

Virtual Assistants:

Some of the renowned digital Virtual Assistants are Siri, Alexa, Cortana, and Google Now, etc. These humans like chatbots interact with customers, answers their queries, and are widely taking place of customer services. Nowadays, Virtual Assistants are also available via phone call. This has reduced the burden for customer service departments.

Fraud Detection:

Every one of us wants to prevent different kinds of frauds, AI with its intelligence helps in preventing credit-card and other transactional frauds. When a transaction is being processed, AI collects different information related to the user like location, client’s behaviour, spending pattern, etc. Whenever there is something fishy, AI raises a red flag for that particular account. Banks also use AI for other crimes such as money laundering. They identify suspicious activity and automatically reduces the workload for investigation.

Personal Finance:

Companies are using AI to provide personalized information to each & every customer by collecting their data and track records. Collecting personal information from every customer helps them to generate reports according to their spending, saving & investing habits. This helps the companies in providing different solutions to people for managing money. For instance, Capital One’s ENO is a virtual assistant that gives you alerts about your money and help prevent any frauds. It alerts you if you’re being charged anywhere suspiciously or if the prices have been hiked, even the hidden subscription charges.

Well not only this, there’s a dark side to this as well. With AI being in demand these days, the jobs of Analysts, Investment Managers are in danger. Unlike in movies where someone finds a way out, believe me, this is for real. Artificial Intelligence also has two sides to it. With the pros being so attractive and technology-driven, the cons can destroy the jobs of millions. Let’s have a look at the cons of AI.

Highly Expensive:

The rapidly evolving technology is too costly for most of the Fintech firms. Their maintenance and production cost firm exorbitant prices which all of them cannot afford as of now. Adding to that, it needs regular updates with the changing environment. In case of failure of these systems, the data loss might not be restored and requires time.

Source: Boston Consulting Group

Unemployment:

Chat bots are taking place of human rendered customer care services. This is slowly eroding the employment of millions of people. Especially, in India, we outsource tele-calling services but with AI coming into the picture our workforce is losing jobs and suffering from unemployment. Here, look at the statistics that affect the financial industry.

Controlling Power:

People who control AI and their functioning have more power and access to the data of millions of people. Thus, there is a risk factor involved and the power lies in the hands of few humans.

AI is the future of the Investments domain. Thus, with the tech-savvy people evolving more products using the existential base more companies will be taking up Artificial Intelligence. It is a win-win situation for most of the companies as they can save their costs on the hiring of people and avoid human errors. Firms who see it as a long-term investment with secure steps to be taken for security & privacy of information has a competitive edge over others.