Wall Street has always been an early adopter of new and innovative technologies and its growing enthusiasm towards AI technologies is showing that once again the finance industry will be on the cutting edge of technology adoption.
Right now there really four (4) key areas where Wall Street firms are seeing the most potential for AI related technologies.
Trading: While there are some funds that have recently launched that are billing themselves as “AI first funds”, most activity in the short to medium term will come from the larger hedge funds and bank trading groups building out their AI groups to work alongside their current data teams. The war for AI talent is real and so only organizations that can promise an AI scientist the ability to really move the needle will succeed and the only way to make that promise is to be able to back it up with breadth and depth of capital and reach. This is something that AI first funds and smaller quant funds don't have.
Compliance: Compliance is costly and time consuming. However, as regulations continue to increase so does the complexity of remaining in compliance. AI technologies will be able to help companies significantly reduce these costs while also decreasing error rates. A company to watch in this space is Neurensic.
Internal Threat Monitoring: This presents a huge opportunity because the ROI is so jaw dropping significant. Just imagine if you could apply an AI driven software algorithm to your organization and spot problems before they become problems? Remember Jerome Kerviel the rogue trader that lost $6.4 billion for Societe Generale? What is the ROI for an AI based software system could have stopped that? A company I love in this space is Digital Reasoning.
Robo-Advisors: Applying AI to the advisor space is tantalizing because it offers firms the opportunity of increasing their reach, especially among consumers with smaller asset sizes, and/or among younger people without significantly increasing costs. It also gets the most press because it is an area that non-financial industry observers can relate to. But it is also the area that will see the longest adoption curve.
All four of these areas offer tremendous opportunities for entrepreneurs in the AI space. It will be exciting to watch what happens over the next 12 months.