Financial Industry Moves Towards Artificial Intelligence Based Machines

Samir Vasawada, Co-Founder and CEO of Artificial Intelligence labs based in San Francisco, CA. participates in Risk Roundup with Jayshree Pandya to discuss “ Financial Industry Moves Towards Artificial Intelligence Based Machines”   Introduction Digital Disruption is here. It seems Financial Industry is moving towards Artificial Intelligence based Machines! Humans across nations seems to be on the brink of “Artificial Intelligence Arms Race”. It seems that the use of Artificial Intelligence (AI) is not new. From cars to phones, from thermostats to emails and from games like checkers to chess, Artificial Narrow Intelligence (ANI) system has been in use for a very long time. More advanced ANI systems are also being widely used across various industries like finance, military and manufacturing. As the AI arms race intensifies across nations: its government, industries, organizations and academia (NGIOA), intelligent non-human machines continue to develop rapidly. There are visible signs that Finance industry is keeping up with the AI race and has taken a decisive step forward in moving away from man towards machines! As we speak, digital traders are replacing human traders and fortunes are being lost and made in a matter of milliseconds. Manual trading is being replaced by high frequency computerized trading. Human jobs are being replaced by machine jobs. Role of man is basically being replaced by machines. It seems that the Financial industry has begun to rely more on artificial intelligence to go over earnings statements, news, reports, regulatory filings and various other data information sources. This is with a goal to look for signs or indicators for how to view a stock, investment opportunity and trade profitably. While AI is much faster and more efficient than humans, and brings quantifiable benefits in millisecond’s timeframe to entities that are competing across nations, a lot can happen in those millisecond time frames, for which we the humans, are simply not prepared for. At least not yet! The role of humans is obviously diminishing as the world of Finance moves towards AI based machines. When the role of humans is facing an existential threat, it is important to evaluate the critical security risks each one of us faces across NGIOA in not only today but also in the coming tomorrow. Artificial Intelligence for Financial Services There seems to be a great effort being put towards machine learning. The AI community is working towards fundamentally changing the Financial Services industry. This is with a hope that AI based analytical systems can automatically and efficiently recognize changes in the markets and adapt and adjust in ways that current rigid quantitative models cannot. It seems that the goal of AI developers and community is to develop artificially intelligent financial systems that can analyze large amounts of data at lightning speed and improve themselves through such analysis. In addition, from financial fund management to high frequency trading; across financial services, there seems to be a great effort being made to quickly understand, evaluate and forecast things before they develop and happen. While on the surface it seems that the efforts are more towards speed of action, there is also a push towards cost cutting and bringing efficiency and effectiveness in the stagnant financial system. It is reported that official trades are already occurring using AI trading technology. AI now seemingly determines what to buy, when and how; and it also tells when to sell, reduce exposure and so on. This is just the beginning. As AI driven machines take a step forward in helping strategize many aspects of decision-making process, the question is whether we should allow machines to take decisions for humans or be a tool that will help hum...