AI: Start of Skynet or Future Excel Plug-In?
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Almost everything I read or hear about on AI and automation is focused on the wrong issues. The discussion on automation versus augmentation minimizes the fear of job losses by downplaying the promise of massive efficiencies. Augmentation versus automation is a false dichotomy. Automation is necessary for any type of augmentation and, as you widen the scope of your lens, there are very few pursuits that are entirely automated.
There is no question that automation, and I am not even talking about AI, can help bring massive efficiency and additional structure to the active management process. Individuals and firms who step up their game are the future of the industry. And yet, a recent Liquidnet-commissioned Greenwich Associates study indicates that only about 10% of Portfolio Managers and analysts use AI in the investment process.
One of the legitimate concerns around the advancement of AI is that it favors those firms that can afford to build their own AI capabilities. Some large financial institutions view technology as a weapon. This kind of hubris is actually encouraging. It is this hubris that will allow a disruptor to democratize these technologies and enable individuals to harness the power of Big Data and machine learning. In the right hands, AI becomes a plug-in for Excel instead of the start of Skynet.
By Adam Sussman, Global Head of Market Structure