Rise of the Machines: How Machine Learning is Changing the Capital Markets

The technology-minded capital markets participants do love a good trend. If 2014 was centered around "IBOR-mania" and 2015 was the year that the blockchain exploded into the hyperbole stratosphere, then the major trend of 2016 will arguably be machine learning. It may sound like the sexy new foundation upon which so much of asset management's future can be built, but at heart, machine learning is a data efficiency play, one that many on the buy side are still unable to get right for a variety of reasons. While no one wants to get left behind when it comes to the application of new technology, in this case it really will be those firms that have come to grips with the questions posed by big data management that will have the head start in machine learning. One of the key distinctions to make on this subject is the differentiation between machine learning and artificial intelligence; the former is concerned with automating processes and associated troubleshooting, such as documentation completion or trade confirmation, while the latter mainly concerns the application of that automation--for example, sending out the right information to investors or clients based on historic trends.