Why Machine Learning is Popular for the Capital Market. What Industry Trends Do We See.

Feb 28, 2019 | Machine Learning


This video captures the impact of artificial intelligence (AI) and machine learning (ML) across multiple global capital markets, while highlighting its competitive edge.

Alex Lu, CEO of Kavout, opens his presentation by showing the global distribution of more than ten thousand funds, demonstrating the immense pace and competitive nature of the investment world. Lu believes that investors need to find the competitive edge in order to be successful. To find this edge, Alex analyzed the activities of Wall Street, going as far back as four years ago. What he discovered was that AI had already played an important role for some of the most successful firms. For example, Goldman Sachs currently positions themselves just as much as a technology company than as a financial company. Bridgewater started its own ML group. Even technology companies such as Microsoft partnered with Citadel to use deep learning and natural language processing.

The same technologies used widely in search engines were being applied to the investment world.

Next, Alex delivers the mainstream media’s response to AI in the investment world. Barrons claimed that AI is ‘the ultimate competitive edge’. Institutional Investor said ‘56% of institutional investors plan to increase the integration of AI into third investment processes while 40% expect to boost AI spending’.

Since Alex launched Kavout, the interest from investment firms has grown exponentially. From New York to London to Beijing, investment firms are asking how Kavout can apply AI and deep learning to address their data and find the edge. He gives examples of Fidelity, Black Rock, and Renaissance. From mutual funds providers, to hedge funds, and to asset managers, more people are leveraging AI.

And there is no reason to believe this trend to slow down. Funds like Bridgewater, which actively invests in new technologies, will continue to be competitive and ultimately out-perform their peers.

To close, Lu conducts an analysis on wealth managers’ commentary on AI. He found that 93% of wealth managers said AI would play a role in the future of their practice, while 54% of respondents say that AI will be essential for them to succeed and to offer personalized guidance and services for clients and prospects. He found a significant shift in sentiment about AI. While AI was originally treated as a curiosity and approached with skepticism and fear, today more people are actively using AI for investment purposes.

What is Lu’s prediction of the future? He states that not unlike the early days of search engines, we are on the precipice of the future of AI, especially in the investment world.

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