Man or Machine: Why Not Both?

The increase in the use of artificial intelligence holds great potential for the future of trading technology, as long as humans and machines can work together.


Despite a historic reticence to adopt new and emerging technologies such as the cloud, John thinks the buy side is moving much faster to explore the potentials of artificial intelligence.

Artificial intelligence (AI) is one of the hottest topics among capital markets participants this year and firms across the industry are investing time and money into the space. Discussions have played a huge part in recent Waters events on both sides of the Atlantic, but what's most pleasing to see is how varied the areas of application have been.

The proliferation of robo advisors has so far been primarily confined to the wealth management sector, but it is a trend being picked up by asset managers and institutional banks. At this year's Waters USA event, panelists clearly had divided opinions on the future of robo advisors, with some saying that the element of AI involved indicates a move in the very fundamentals of business models.

Cybersecurity has been another area of increased activity this year, although this time more as a matter of necessity. It is also another space where AI is being adopted to facilitate new developments and automation, as evidenced by another panel discussion at Waters USA. Environment simulation and testing is costly and a huge drain on technical resources; as such it's a good opportunity to utilize AI to cut down on both of those factors.

Data automation and analytics has so far been the primary application for much AI technology so far, particularly on the buy side, and there's no sign of that trend slowing down. While it's not yet a perfect science by any means—there are issues around structured/unstructured and larger datasets—it's clear there is much more AI can do to help.

Caution Required

While all the discussion and developments here are positive for the industry, I cannot help but think that some of the bias against artificial intelligence is most informed by the fear of the "smart machines" popular culture has been throwing at us for years.

At the European Trading Architecture Summit in London last month, for example, it was clear that the fear of losing jobs to robots is still there, which panelists tamped down.

Think for a second about the way that AI is portrayed in mediums such as television, literature or even computer games. Usually it is the tool that undermines humankind's hubris in some way before taking over and relegating us to the history books.

The fantastic HBO show Westworld has recently come to the end of its first season and while I won't spoil anything if you haven't had chance to check it out yet, it does still conform to the classic trope of a human being with ideas of godhood losing control over the "consciousness" they created.

I'm not being an alarmist or a Luddite, and my own penchant for a good story can sometimes distract me from the truth of a situation, but when Stephen Hawking issues a warning on the dangers that AI could hold for the future of our species, it's perhaps wise to at least apply just a touch of caution before handing over too much responsibility to the machines.

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