The smart money these days is on artificial intelligence, with 75 percent of banking and financial institutions expected to leverage AI technologies for conducting research by next year, according to a survey conducted by Greenwich Associates. These AI technologies, including natural language processing, are becoming valuable assets to financial institutions because of their capability to sort through vast repositories of data and uncover useful insights.
Adoption of AI for financial research is being fueled by several dynamics, including the explosion of online data, the arrival of cloud-based AI solutions and the proliferation of graphics processing units (GPUs), as reported by Quartz.
The internet is bursting with billions of images and documents that contain invaluable nuggets of data. However, the sheer volume of this information makes it impossible to monitor and analyze via conventional manual review techniques.
Moreover, GPUs originally designed to enhance graphics display on electronic devices have proven to be adept at processing large data sets, including the massive volumes of financial information available on the internet.
Meanwhile, the cloud has made AI algorithms generally available for purposes like financial research. Natural language processing algorithms can uncover patterns among large quantities of data, such as financial news and reports.
“AI technology is developing at a rapid pace and we will soon see significant disruption across investment banking business lines,” said Richard Johnson, vice president of market structure and technology at Greenwich Associates, in a press-release statement. “In today’s environment of continued cost pressure and low margins in many businesses, investment banks are even more incentivized to reduce costs through automation. AI and robotic process automation promise to provide just the solution they are looking for.”
The use of AI technologies like natural language processing promises to make financial research more efficient and cost effective. This could boost productivity, helping to boost employment in the financial industry, Quartz noted.
However, some observers are more pessimistic, fretting that AI could lead to job reductions if research analysts fail to adjust their skills. Johnson warned that 15 percent of financial industry jobs could be at risk.
While research is the part of the financial business expected to be most influenced by AI, Greenwich said the impact of the technology is widespread. Other areas being affected by AI include customer support, trading, sales, and compliance.
The Greenwich survey, conducted between June and August 2017, gathered insights from 100 financial services executives based in the United States, Canada, Australia and the United Kingdom to gauge their level of engagement with AI technology.
Tyler Schulze is vice president, strategy & development at Veritone. He serves as general manager for developer partnerships, cognitive engine ecosystem, and media ingestion for the Veritone platform. Learn more about our platform and join the Veritone developer ecosystem today.