26 June 2016
Make Way for The Robot Stock Pickers
By Attracta Mooney
The Financial Times speaks with industry experts about the role of artificial intelligence (AI) in asset management, quoting Alexey Utkin, SVP in the Finance Practice at DataArt, who shares his thoughts on the extent to which humans can be replaced by machines in the financial services, and addresses concerns about the increasing use of machines in investment management.
“‘Artificial intelligence can replace stock pickers in many funds,’ says Alexey Utkin, who leads the UK financial services practice at DataArt, the technology consultancy. ‘Why employ hundreds of asset managers, each selecting stocks and implementing investment strategies, when a few programs can do it for you?’
This shift away from human fund managers is not some far-flung dream that will happen decades into the future, adds Mr. Utkin. ‘Within the next two years I expect to see more and more examples of AI-led investing. Within the next five years this could very well become the standard,’ he says.
‘But building strong artificial intelligence technology is expensive. Mr Utkin says: ‘With the relatively high cost of running and advancing AI, we may see certain players losing the competition and disappearing.’
The risks of artificial intelligence within finance.. [pose] concerns about the increasing use of machines in investment management.
Alexey Utkin says the growth of artificial intelligence in investment products brings both rewards and risks for investors.
“It may change the market structure, bringing more centralisation and other systemic risks, leading to greater volatility,” says Mr. Utkin.
He gives the example of currency trading, where rather than hundreds of foreign exchange traders selecting which currencies to trade and at what price, a few algorithms could dominate the market in future.
“This kind of centralisation within markets often leads to greater risk and higher volatility,” he says.