Robo-advisers are forecast to take at least 15% market share of the Asian wealth management industry in the next seven years. Platform providers highlight the innovations that are driving the industry forward and debunk common myths about the financial technology. Robo-advisory platforms have grown exponentially in Asia in the past two years. Innovations have resulted in enhanced and more sophisticated offerings for investors. This will only propel the growth of the industry. Bhaskar Prabhakara, co-founder and CEO of Singapore-based robo-advisory platform WeInvest, expects robo-advisers to take at least 15% market share of the Asian wealth management industry by 2025. "There is a strong case for this. We went to many countries to talk to regulators and look for partners and everywhere we went, people acknowledged the fact that the robo-advisory wave -- a digital wealth tsunami -- is coming," he says.
The use of artificial intelligence (AI) and machine learning is a relatively new concept in the world of investment, but it is one that is increasingly gaining traction and its popularity is only set to growth along with technological advances. In a recent report, Thematic Investing: Transforming World, Bank of America Merrill Lynch identified big data and AI as one of the five key themes set to shape our world in the next five years, with areas such as technology, e-commerce and payments seeing particularly strong tailwinds. "The pace at which themes are transforming businesses is unprecedented today, but we believe this rate of technological change will be faster still over the next five years," the report said. "The exponential growth of data (doubling every two-three years), cheapening computing power …and rise of a connected world (Internet of Things, mobile devices, social media) will bring about the fastest transformation in human history." While some industries are already fully embracing artificial intelligence, we are only just beginning to see the impact it can have on financial services.
The traditional finance sector as we know it is going through a process of change. As new technologies disrupt the conventions and dogmas, whole industries are transformed, keeping pace with the rapidly-changing world. Finance is no exception to this rule, and, as a sphere that lives and breathes quantitative data (lots and lots of quantitative data!), it has been particularly sensitive to the rise of the artificial intelligence, a technology driven by the computers' newfound ability to crunch massive troves of data. And while it may or may not be too early to speak of the financial industry as we are about to know it, it is already clear that AI in finance is very much a part of it. But before we delve into all the exciting ways that AI is reshaping the financial sector in, it may be worth saying a few words about the technology itself, especially given all the buzz and hype around it.
And while that was happening, the financial sector was also taking note. Among the many boons of AI tech for finance is the practice called algorithmic trading: the idea that an advanced AI may be able to assist the investors by predicting the market dynamics with enough precision to make consistent profit. And while many advanced machine learning models developed for this purpose stay outside the reach of the general public, others are eager to make AI-driven trading available to a broader audience. One of the leaders in this sphere is the Israel-based company with an ambitious name I Know First. With its powerful cloud-based AI capable of predicting the price dynamics for more than 10,000 financial instruments, including stock ideas, ETFs, world indices, commodities and currencies, it offers its forecasts to private and institutional investors alike.
Algorithmic trading using financial models has a rich multi-decade history, and artificial intelligence (AI) is the new emerging trend in the asset management landscape. Traditional trading algorithms were built to exploit specific opportunities, whereas the new generation of algorithms use the power of AI to truly act as independent agents participating in market action, and working day and night in a way that humans simply can't match. AI is a mixed bag of tricks including machine learning, deep learning, conversational interactive systems, and various other "bot" technologies. And the investment landscape is also being affected by AI- after all, AI can read and understand billions of pieces of data, which means one can spot trends better with its aid. It will help investors, portfolio managers, sovereign wealth funds (SWFs), and other financial institutions to predict the future prices more accurately and without the burden of emotional investing.