Over the last decade, technology has advanced more significantly than most would have ever predicted. Machines are getting smarter and faster, and their learning and self-improvement rate is better than ever before. And yes, we said learning, or what the tech-savvy audience would call artificial intelligence, which is taking over many industries and the trading and investment sector is no different.
AI has been in the financial industry since the early 80s when developers tried to equip a symbolic system with human thinking to help deal with large amounts of data in the industry. This made it more receptive to AI solutions than most, which saw some successes and failures along the way. But now that the technology is reaching maturity, how is it making waves in the trading and investment sectors? We will highlight some of the ways in this piece.
The trading and investment industries have utilised AI to gain a competitive edge over their competitors. For instance, implementing AI-driven technology to run risk analyses on borrowers ensures that banks only issue loans to low-risk customers. AI bots have also seen wide use in automating the onboarding process in some financial organisations, improving their user experience and competitiveness.
On the other hand, investors have also benefited from utilising AI to develop investment strategies that use its data analytical capabilities. This has helped investors and brokers make better investment decisions and increased their accuracy, bottom lines, and mitigating risks.
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AI-based technology tends to have better processing power and capabilities than their none AI counterparts, which makes them more capable and increases efficiency. They can also use their machine learning capabilities to implement findings from sets of data they have already analysed into future projects and analyses. Therefore, traders and investors are now more able to concentrate on current market conditions and future challenges that still need solving.
AI also enables traders and investors to respond faster to changing market conditions than any human ever would. Furthermore, the automation of the trading function makes buying and selling trading assets more effortless, increasing trades’ overall accuracy and profitability.
The financial industry is no stranger to cyber security threats and the ever-growing list of fraudulent practices online. However, AI-based technologies have turned the tables and helped security analysts in the financial industry to stay one step ahead of the threats. AI helps analyse thousands of threats that come in every day and helps prioritise potential ones from the noise, increasing their efficiency and response times.
In addition, because AI is constantly learning, it can better keep up with advancing threats as they evolve. It can use information gathered from past threats to identify new ones, ensuring better security in the financial sector.
AI-based technologies can rapidly analyse data from multiple sources and give predictions and recommendations about future actions. This is essential in trading and investing as profitability heavily relies on accurate predictions of future outcomes. Today investors and traders don’t just have to rely on their deduction powers but can also utilise proven mathematical formulas and algorithms made available by AI-based technologies.
Traders and investors are also better able to analyse future changes in demand and supply and how that affects investments and stock options. Because of AI’s capabilities, it can predict future trends to a very high degree of accuracy, reducing some of the uncertainties witnessed in past times.
Trading has come a long way from what it used to be just a few decades back. Traders and investors had to rely on the power of elbow grease to research and identify the best positions to hold. But that all changed with the computer, the internet and the most drastic change of all, AI.
AI has enabled the financial sector to analyse thousands of data points and make more accurate predictions of future outcomes better than they would have otherwise. Increasing the chances of being profitable in the markets while drastically reducing the risks involved in trading.
AI technology is also fast advancing, and there is no telling what it will be capable of in just a few years. Nonetheless, We’re excited and can’t wait to see what the future holds.