AI: The New Driver in Financial Institutions
The Coronavirus pandemic has proven to us that technology is the new driver of the world and the markets too.
More companies are using artificial intelligence technology to leverage computers' ability to mimic human learning.
With more than $250 billion currently under management in the U.S., various industry studies predict that the amount managed by robo-advisors will continue to grow at a torrid pace. At one point, many even predicted that robo services would drastically reduce or eliminate the need for traditional advisors (Roger, 2020) .
Clearly, the demise of the human financial advisor has been greatly overstated. While robo-advice has disrupted the advice industry, it has by no means replaced humans. In fact, the technology has generally served to enhance the delivery of advice ( Roger, 2020)
The growth of artificial intelligence has several benefits as seen from a new partnership between Blackrock and JP Morgan & Chase. These two firms have teamed up with artificial intelligence (AI) technology startup Saphyre to automate the opening of custody accounts (Irrera, 2020). The system, which uses AI to remember when an asset manager has already uploaded a specific document needed to open a custody account, has been tested for the past six months and will now be used by the bank with BlackRock and other asset managers (Irrera, 2020).
One might think that this new innovation and partnership will be a threat to jobs, however the companies expressed that the system will make new funds get to market quicker by streamlining what is now a heavily manual process involving reams of paperwork, spreadsheets and faxes (Irrera, 2020).
Blackrock and JP Morgan & Chase are not the only institutions that have invested money into AI, several Analysts and experts estimate that AI will save the banking industry roughly $1 trillion by 2030. According to Narrative Science, 32% of the participating banks in their 2018 report are already incorporating predictive analytics, recommendation engines, voice recognition, and response times in their processes Noelle, 2019).
AI is taking away a lot of the burdensome work away and is helping firms remain focused on serving its clients.
Works Cited:
Irrera, A. (2020, September 15). Reuters . Retrieved from Reuters : https://www.reuters.com/article/us-jpmorgan-blackrock-saphyre/jpmorgan-and-blackrock-tap-ai-startup-to-automate-opening-custody-accounts-idUSKBN2661V1
Noelle, C. (2019, November 14). Process Maker . Retrieved from Process Maker : https://www.processmaker.com/blog/why-ai-is-the-future-of-finance/#:~:text=Analysts%20and%20experts%20estimate%20that,roughly%20%241%20trillion%20by%202030.&text=On%20the%20front%20end%2C%20conversational,many%20benefits%20to%20uplifting%20finance.
Wohlner, Roger. “How AI Is Shaping the Advisory Landscape.” Investopedia, Investopedia, 28 Aug. 2020, www.investopedia.com/financial-advisor/how-ai-shaping-advisory-landscape/
