How Artificial intelligence is changing the financial industry for the better?
Artificial intelligence does not come; It is here. From Google’s traffic data to the filters on your email, to Facebook’s face recognition software to Amazon’s product recommendations, AI is behind all the work people are doing today. AI is revolutionizing your finances. What started out as a mobile check deposit has evolved into new ways to monitor, make and communicate investment decisions. Financial institutions and investment managers alike use AI to make better, faster, cheaper and easier investments. Here are 11 ways to improve artificial intelligence investment.
Better forecasts lead to better investment decisions.
“AI and machine learning help asset managers” quickly and accurately absorb new information into their portfolio building processes, “says Brian Kelly, a finance professor at Yale School of Management and head of machine learning at AQR Capital Management. As computing power increases, so does the financial industry’s ability to capture and analyze data using more robust statistical models.
Resistance to emotional biases.
Behavioral finance shows that human investors are not rational. Michael Cicero, director of portfolio research and management at High Probability Advisors, says all types of investors, from retail to institutional investors, are prone to behavioral bias. For an example of loss-avoidance bias, look no further than the University of Chicago’s equity sale in 2008, or the emotional bias caused by investors suffering more from loss than from a gain, says the Endowment, an innovative investment committee. Loss avoidance, such as unreasonable decisions, is “as harmful to long-term expected returns as poorly designed investment strategies,” says Cicero.
Voice Activated Investment & Research.
Thanks to artificial intelligence, investors no longer even need keyboards to invest in. Companies like TD Ameritrade make voice-activated investments that allow you to set up trades, research markets, and test your portfolio using Alexa.com (ticker: AMZN), a cloud-based voice service. With an Alexa-enabled device, your investments and financial education can stay on top of everything – even while driving in the car. The in-vehicle features allow investors to ask Alexa about the stock market or check account balance and investment performance while on the go. This is an example of multi-tasking portfolio management, congratulations to AI.
Strong advisor-client relationships.
Payments Lead Fintech, Analytics, and Innovation in LatentView Analytics AI helps financial advisors automate certain aspects of client relationships, from initial communications to risk profiling and all legal documentation related to client-adviser relationships. “In addition, by using Intelligent Information Management Solutions, staff have the ability to simplify how to access, secure, process and collaborate on documentation,” he says. This increases productivity as consultants and their staff can find and access information quickly.
High quality financial advice at low cost.
Behind these strong financial advisor-client relationships is a low-cost, high-quality advice for companies, says Appuswamy. By “offloading routine tasks such as primary data collection, research and matching robot advisors,” advisers and asset managers can focus their time on “creating premium strategies and packages for each client.” “AI services also allow firms to offer a broad range of financial services to audiences in different income brackets,” adds Appuswamy. Advisors can offer better advice to more people at a lower cost thanks to artificial intelligence.
Investor Communication for Faster.
When you last contacted a financial services firm, your first line of communication was using some kind of artificial intelligence. “AI chatbots now serve as the first line of support for retail clients,” says Phil Andriyewski, a data and analytics leader at EY. While chatbots may not always be able to answer your question, every question a bot answers is a question that must pass through a man’s desk. As a result, AI communication reduces investment costs for firms and investors. This speeds up communication and makes digital communication more pleasing to those who love it. Unlike human advisors, chatbots are available 24/7 and you do not need to pick up a phone to reach them – unless you are chatting through a mobile app.