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What's the potential of AI in investing?

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by Nucoro
| 01/08/2018 12:00:00

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Science fiction has always asked us to imagine a universe in which computers could think and manage our lives for us. Today, those same authors and filmmakers might do better to ask us to imagine a life in which they don’t.

From healthcare to weather forecasting, skyscraper construction to shopping, all aspects of our lives are being increasingly shaped by a digital revolution. Built to mimic the processes of the human brain, artificial intelligence (AI) systems analyse, interpret, react to, and – most importantly – learn from the things we do.

With this disruption taking place across a number of industries across the world, a clear benefit in analysing data on such a large scale is the greater efficiencies that can be delivered and reduction in operational costs for businesses, which are then being translated to the consumer.

AI is giving us insights into the world (and helping us make sense it) by processing a staggering amount of data pulled from every corner of life. Technologies such as deep learning, parallel computing and machine learning are using that intel to solve key problems and, better still, adapt to future trends.

And it’s no different in the world of financial services. However, the full impact that AI has to offer has yet to be seen in the retail investment market - until now.

Old vs new

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It’s unsurprising that AI’s ability to identify and predict trends has found a keen champion in the finance sector, given the unpredictability of the future. Where before, investors relied on detailed human analysis to make decisions on where to put their money, now, with AI able to process data at such a huge scale, no human could ever compete.

The best analysis will always have the greatest potential to reap the biggest rewards, and AI is proving to be the game changing tool for just this.

However, to date, this technology has only been accessible to institutional investors and the top tier of the private investment world. Exo Investing is here to change that - recognising the potential of AI to enhance individual lives by giving you the control needed to make better financial decisions and make the most of your investments.

Quite simply, data doesn’t get emotional. AI strategies eliminate the innate biases exhibited by even the most savvy human investor. With Blackrock CEO Larry Fink announcing a shift towards quant investing, is the future of financial advisers hanging on a thread? Absolutely not. Humans are intuitive creatures, adept at building relationships – critical to long term financial life planning.

Financial advice comes at a cost though, and has long been a luxury that the vast majority of people can ill afford, with only 6% of UK adults having used regulated advice in the last 12 months. This makes it easy to understand the rapid rise of ‘robo-advice’, reducing the cost of the investment process through a truly digital process and automation.

AI provides an opportunity to go beyond robo as we know it today, bringing through a phase 2 or ‘robo 2.0’. By fully harnessing the potential for quantitative analysis and algorithms, we’ve reached an ability to put control back in the customers’ hands.

Is it really man vs machine?

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This isn’t about replacing man with machine though. It’s about using advances in digital capabilities to help more people start their own investment revolution. Equally, it’s about empowering DIY investors, with more sophisticated methodologies or market knowledge, to access greater financial control, with less effort and minimal fees.

Financial advisers are able to justify their fees with the tailored advice they offer, helping you navigate your finances through complex situations. But what about those with a simpler need?

Access to a digital wealth manager, who recalibrates and optimises your portfolio daily, at a single low cost fee, could be much more attainable and justifiable.

The idea that AI can ultimately democratise wealth creation and wealth management marks an exciting time for individual investors. AI’s true potential is being realised by offering investors (particularly experienced ones looking for an alternative to having to manage their whole portfolio manually) smarter, more sophisticated financial solutions that let you keep the element of control, but reduce your effort, exposure to risk and costs.

In analysing swathes of data, AI means we can layer a multitude of factors to create truly unique portfolios for investors. Market analysis can now include past, present and synthetic market scenarios. Individual risk parameters and financial goals can be placed alongside your investment preferences. And importantly, this all occurs minute-after-minute, day-after-day to ensure every portfolio remains optimised.

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