The global market intelligence in 2021 was worth $51.5 billion, according to Research and Markets. But in 2025 it will reach 171 billion.
An introduction of algorithms in the public and private sectors according to experts will contribute to growth each year, between now and 2030 by 1.4%.
Artificial intelligence not only represents an investment for companies and the public administration but also a way to improve services and products. It is not surprising that an increasing number of lenders rely on the use of this technology.
The financial sector is one of the main commercial targets of artificial intelligence. Algorithmic robots are able to perform tasks such as reporting, data analysis, and advertising campaign management.
They can also be used to offer personalized financial advice to clients, based on their needs and preferences.
Many institutional investors already understood the benefits of using artificial intelligence in portfolio management. Pioneers of this new trend were quantitative funds, which have been using algorithms to trade on the stock exchange since the 1980s.
Today, the use of artificial intelligence in portfolio management is also widespread among retail investors. In fact, robo-advisors offer small investors the opportunity to build and manage a portfolio tailored to their needs.
The are many advantages to using a robo-advisor. First, the costs are generally lower than those required by a traditional financial advisor. Secondly, robo-advisors are able to provide personalized advice in real-time, thanks to the use of artificial intelligence.
BANKS AS REWINDERS ARE BETTING ON ALGORITHMS
For the experts who have put their hand to the new ebook of M&G banks aim to use AI for at least three purposes:
1- Evaluate customers from a credit analysis and risk assessment perspective
2 – Detect and prevent financial fraud
3 – Allow access at any time to financial advisory services linked to current accounts
Above all the third point interests banks because it interests their customers more and could give added value to what the bank offers.
A robotic financial advisor is cheaper, faster, more transparent, and more flexible. The customer, even a person with poor financial preparation, can have access to very valid information.
You will be able to receive personalized advice on wealth management based on your objectives, buy or sell financial products, as well as receive reference to the earnings of your shares.
– Lower costs
– Safer exchanges
– A personalized experience
Even the bank itself can use it to build investment strategies. Investment funds such as that of Ray Dalio, who is one of the best known and most appreciated, have for a long time been using mechanical consultants to make choices.
It’s now clear that AI supports human management teams thanks to intelligent machine learning algorithms.
Algorithms are in fact an accelerator for the processing of a vast amount of historical data. Then autonomously express opinions on the quality of the securities, thus helping to optimize the portfolio.
There are three human pillars that will be strengthened with the help of this tool. And we will no longer be able to do without it, particularly in the financial sector.
THE THREE IMPACTS FROM WHICH WE WILL NO LONGER GO BACK
These three aspects will modify forever the financial sector.
According to M&G, AI expresses its maximum potential when it works shoulder to shoulder with human skills.
It enhances three qualities: reasoning, learning, and planning.
1 – Reasoning
Machines haven’t been able to replace human critical thinking. Still, they can support decision-making processes thanks to the ability to process a quantity of information much greater than it can be managed with human forces alone.
This is why artificial intelligence can identify investment opportunities and make decisions faster and more accurately.
2 – Learning
Machines are able to continuously learn from the data they process and improve their performance over time.
Machine learning models can be “trained” by human experts to identify certain characteristics in the data, such as the likelihood of a company issuing new shares or repaying debt within a certain period of time.
3 – Planning
Machines can help investors plan their investment strategies more effectively.
Optimization and simulation models can be used to test different investment hypotheses in terms of return, risk, and cost, allowing investors to choose the optimal solution.
THE INVESTMENT REVOLUTION WILL LEAVE PERSONAL FINANCE
M&G Investments believes that the personal finance revolution will have an even greater impact on the investment sector, thanks to the spread of increasingly accessible and user-friendly artificial intelligence tools.
Robo-advisory platforms are emerging as a cost-effective and accessible way for investors of all experience levels to obtain investment advice.
M&G predicts that the growth of the robo-advisor market will generate an increase in demand for artificial intelligence tools from traditional investment platforms.
Furthermore, he believes that AI will have an impact on how investment strategies are defined. Algorithms will be used more often to develop new investment models based on historical and current data.
Finally, M&G believes that artificial intelligence will enable investors to gain a clearer and deeper insight into the market as they rapidly process and understand much more data.
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