Right now, the buzzwords of finance and trading tend to circle the regulation of Bitcoin and other cryptocurrencies, as well as its potential as an investment vehicle – regardless of the purpose of the innovative technology. Back in the 1980s, or even as far back as the 1970s, it was all about the computerization of financial markets and the fabled trader-beating algorithms.
Speakers to the Economist detailed the Wall Street Journal as offering a significant information advantage to traders in the 80s. Nowadays, just about all finance and trading institutions rely rather heavily on automation.
Automation often leads to increased productivity and efficiency, and while it was once a harbinger of the apocalypse and helped fuel Black Monday, the technology is now core to a great deal of stock market activity and has even expanded into the wider world of consumer-facing finance.
Automation changed trading forever and will continue to do so further
When conjuring up images of the stock market, the trading floor, and traders, what often comes to mind is a rabble of people shouting at a podium, calling numbers, and watching the tickers. When people use a broker to get them some shares, they’ll sometimes picture a setting of near-anarchy as the broker muscles to enter their call.
However, much of the process of trading is now automated. Automated trading systems have been around for decades in some form, with Investopedia describing them as the means by which traders establish rules for the program to then perform trades automatically. In fact, a platform that saw all of its trading performed by humans in 2004, EBS, now thinks that some 70 percent are made by algorithms.
The simple reason behind this is that algorithms can, by their very nature, identify opportunities faster than a human, leading to more than half of the S&P 500 Index trading being automated. It used to be that traders would review the news, use their own experience and savvy, and act accordingly on each day to maximize their successes.
While publications are still made specifically for traders, and traders will analyze all viable news outlets, there’s now a platform that tailors its timely news releases specifically for the algorithms. Lexicon packages its news releases to deliver cold, hard stats and data that can be specifically analyzed by automated trading programs. The news outlet itself is part automated, too, with it scanning Dow Jones stories in real-time to then repackage them for delivery to the algorithms.
Factors like this are only fuelling the allure and strength of automated trading programs, especially now that the new horizon of artificial intelligence has arrived. One such AI-enhanced platform is that of Kavout, which utilizes deep data, thinking, and discovery AI technology to power its machine learning investing tool.
Still, as pointed out by an opinion piece, human intervention is still an important piece of the puzzle. This is because, to get an edge in a scene loaded with automated programs analyzing the same data, it still takes unique insights and talent that only a human can provide.
Automation and AI continues to enhance wider finance
Automation has done a great deal to speed up the stock market and the activities of its various stakeholders, but the technology and its current most-evolved form, AI, are influencing far beyond the trading floor, seeping into the whole world of Finance. Autonomy is becoming the key phrase of these technologies in the modern-day, with McKinsey highlighting that the large strides made by machine-learning algorithms are enabling such a high level of automation.
Circling back to the buzzword of the day, cryptocurrencies, the blockchain technology that they’re built on is paving the way for more autonomy in finance. This is being demonstrated by ZF Friedrichshafen teaming up with Swiss Bank UBS and Innogy Innovation Hub to automate payments for smart cars. Further, automation is expanding the capacity of money-centric products online.
Humans can only monitor and regulate so much
So automation technology has been deployed to the progressive jackpot games of Betway, ensuring that prizes can climb into the millions and are only rewarded completely at random to one lucky player at a time. In another consumer-facing advancement for finance, AI is helping on the customer service front. This is most famously demonstrated by the HSBC virtual assistant, Amy, who can answer a huge range of questions and direct to helpful services if needed.
As we explored at iStockAnalyst, assistance with customers is one of the main uses for AI when deployed by small businesses, helping to cut costs and streamline the experience. This time-saving element helps to bolster the customer experience and grant more time to the owner of the tech. Just as in trading, where firms are speeding up the process of their activity with automation, so too are eCommerce companies.
InfusionSoft stands as one of the leading programs helping to enhance efficiency in this way – being an all-in-one marketing automation tool – but it’s far from being the only one that’s being adopted by online stores. This helps to manage the spending of the tool user, enabling investment elsewhere.
Automation and AI will continue to be major players on the stock market, just as they will continue to improve other money-centric operations. However, in many of these examples, human oversight is still required on some level.