Will Finance Professionals Be Replaced By Technology In The Finance Industry? Not Yet.
In an interview with Goldman Sachs Asset Management, Daniel Nadler, the CEO of Kensho Technologies says he was surprised to learn that there were no tools to assess the impact of world events on financial assets when there was clearly an immediate impact.
I was stunned to learn that as important developments were occurring around the world—central bank announcements, elections in Europe, the European sovereign debt crisis, turmoil in the Middle East, etc.—there was no existing mechanism to track similar historical events and analyze the implications so as to glean insights. Neither regulators nor bankers had an efficient and effective method for assessing the impact of similar events on financial markets beyond digging up old news clips and manually creating spreadsheets.
Kensho is a big data search engine that does not merely match keywords in documents to throw up answers. It generates answers by analyzing relationships between events, regulations and any other factor that might impact a situation…and it does so in seconds. A team of analysts would have taken several man-hours to provide the same answer.
Kensho is one of the newer entrants using technology to make inroads into the financial industry. Nadler refers to this as the Fourth Revolution.
The First Industrial Revolution used water and steam to power production. The Second used electric power for mass production. The Third used electronics and information technology to automate production. This Fourth revolution is building on the third to create a “digital revolution.” In this vein, our goal is to bring advanced technologies, like machine learning, to bear on aspects of the capital markets in ways that, until now, have been the provenance of a very select set of elite hedge funds. By making this technology more accessible, market participants are able to gain a more efficient and transparent understanding of capital markets. Through our media partnerships, we are also bringing greater market insight and transparency to everyday investors, revolutionizing their access to information that helps them achieve their goals.
One of the first places that technology started changing things in the financial market was the stock market. Companies started using software to buy and sell shares for customers who had smaller investments to make. Bots were making buying and selling choices far faster and way cheaper than their human originals. Trading algorithms were placing trades based on pre-set instructions. Their speed and frequency made it impossible for human traders to match.
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New areas include project appraisals, where software are analyzing all types of data while considering approvals, not just credit scores. Complex software are helping retail customers invest in the stock market, with no interaction of a human financial advisor. Wealthfront is an example. Compared to dealing with a financial advisor who eggs you and calls you repeatedly, Wealthfront has made investing super simple and easy, with options to make recurring or one-time investments easy.
Technology is going to replace the $20 customer service representative, but it is also going higher up the value chain. As machine learning becomes more sophisticated, complex tasks that involve analyzing are being taken over by technology. The financial industry stands to lose 54% of its jobs to technology in the next 20 years. Here are some of the roles technology has already taken over in the financial industry.
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