Artificial Intelligence of AI is the new mantra for IT companies in 2016.

While one of Google’s AI programs won the complex game of ‘Go’ against the world’s best player, pulling out moves a human mind could not comprehend, other IT companies such as Facebook are turning vast amount of data and computing power into AI and Microsoft is experimenting with machine learning chat bots.

The way people interact with technology across industries is being changed with the advances in AI.

The sectors that seem particularly ripe for some disruption are the typically conservative banking and finance sectors.

With no human intervention required, a Hong Kong-based company, Aidiya, launched a hedge fund that made stock trades in U.S. equities using AI, tech magazine WIRED had reported in January.

More recently, $1.5 million in venture capital funds was raised by a technology company, Numerai, which has an artificial intelligence tournament to predict the stock market. A hedge fund the company created to trade in the market makes use of the predictions.

However, just as the industrial revolution rendered many occupations redundant, the advances have also fueled speculation of a wave of job losses as machines replace humans. By 2020, 5 million jobs could be lost to machines, the World Economic Forum predicted in January.

However the topic needed a more nuanced approach when it came to the banking and finance sector, experts said.

Low-skilled finance jobs, such as basic analytics and number crunching, could soon be done by AI, said Avinash Hegde, co-founder of a chat bot service Supertext while speaking on a panel discussing global trends in fintech at InnovFest UnBound, a digital technology conference organized in Singapore.

“The way we interact with business and financial analysts is going to dramatically change in the next few years,” he said.

But what about the security of jobs of financial analysts, would they lose their jobs?

The answer seems to be “Not quite.”

There would be plenty of regulatory, data and accuracy issues, given the fact that people’s finances are at stake.

“There’s a lot of liabilities,” said panelist Matthew Blume, director for client technology in ASEAN at financial services provider Thomson Reuters.

It would be easy to game the price of a stock by suggesting the company was going to perform poorly, even if its finances were sound, if much of the trading in the stock market was done based on sentiments that were generated by AI, explained Blume. That would automatically push the stock price lower, he said.

There have also been some notable misses even while much had been said about the progress of AI. Microsoft’s machine learning chat bot, Tay had to be shut down as Twitter users turned it into an internet troll in less than 24 hours. The chat bot had been made to tweet out expletives, racist comments and other vulgarities.

“You still need that human interaction … you need people in the mix there,” Blume said.

AI was suited to perform only certain tasks when it came to providing personal banking services.

“Trust is the main currency of finance. If you are going for high net-worth individuals, they need that personal touch,” said Tim Alvner, chief financial officer at a Taiwanese fintech startup, Kuchi.

Blume said that getting cold, hard math rather than gimmicks from investment advisers would probably be preferred by millennials who have grown up in the digital era and would likely be happy receiving financial advice from robots.

“They have actually seen what happened during the global financial crisis,” Blume said.

(Adapted from CNBC)

Categories: Economy & Finance, Uncategorized