Date
28 July 2017
A shopkeeper watches TV sets relaying the DeepMind Challenge Match between top Go player Lee Sedol and Google's AI program AlphaGo in Seoul on March 15. Photo: Reuters
A shopkeeper watches TV sets relaying the DeepMind Challenge Match between top Go player Lee Sedol and Google's AI program AlphaGo in Seoul on March 15. Photo: Reuters

AI will be a disruptive trend in asset management sector

Successfully beating South Korean Weiqi, or Go, grandmaster Lee Sedol, Google’s artificial intelligence (AI) program AlphaGo has proved itself a grand milestone in AI development.

AI has been on fast track of evolution in recent years, and has been applied in areas like self-driving vehicles, voice recognition, bio-information analysis, etc.

In the financial markets, some top tier hedge-funds have been deploying AI in the investment decision making processes. In the coming years, AI is expected to step up its engagement in the investment business along two paths: robotic assisted wealth management and big data powered robot analysts.

A robot consultant can provide investment advise for clients based on modern portfolio management theories.

Low investment thresholds and cheap management fee are their biggest advantages. The threshold may be as low as US$10. It allows ordinary people to enjoy the service which was accessible only to the high-end clients in the past.

In the past two years, many big asset management companies have introduced robot consultants.

Consulting firm A.T. Kearney believes that robot financial consultants could see their assets under management reach US$300 billion in 2016 and expand further to US$2.2 trillion by 2020.

On Charles Schwab’s robotic financial service platform, when a client submits answers to a set of questions such as the investment return target, risk appetite, preferences, income and investment amount, the robot automatically gives the most suitable investment strategy and a corresponding suggestion of the portfolio.

In addition, the robot can also monitor the performance of the portfolio continuously and make adjustments where necessary.

Robot financial analyst is another promising AI product. Some investment banks have started using software to produce financial results for listed companies.

As the technology advances, robots will be able to make deeper analysis.

Financial data analysis service provider Kensho has secured investment from Goldman Sachs, Google and CNBC to develop an information analysis platform for professional investors who need to process large-scale data sets.

The platform is named after Warren Buffett. It aims to be the Siri of the financial world.

AI can be a disruptive force in the way we undertake investments.

This article appeared in the Hong Kong Economic Journal on March 16.

Translation by Myssie You

[Chinese version 中文版]

– Contact us at [email protected]

MY/DY/RC

General Manager, Head of Investment, Investment Management, Bank of China (Hong Kong)

EJI Weekly Newsletter

Please click here to unsubscribe