Machine learning is threatening to disrupt the hedge fund industry as AI becomes powerful enough to forecast market moves better than people. As the industry “struggles with middling performance and outflows,” excitement is building for AI fields to “unlock lucrative patterns” in Big Data, the Financial Times reports.
It’s important to keep in mind that this is a sales pitch, but it is interesting viewing nonetheless.
We are living in an age in which the behavioral sciences have become inescapable. The findings of social psychology and behavioral economics are being employed to determine the news we read, the products we buy, the cultural and intellectual spheres we inhabit, and the human networks, online and in real life, of which we are…
The Wall Street Journal discusses the windfall Goldman Sachs has made from its 2012 acquisition of credit reporting firm TransUnion. The TransUnion deal has given Goldman access to a trove of new consumer data, which the bank has packaged and sold to online lenders, including LendingClub and Prosper, for significant profit.
Some analysts believe that if banks adopt wider use of artificial intelligence in customer analytics, similar to online retail giant Amazon, they could vastly improve the industry’s capabilities in an area in which it has often struggled in the past.
The New York Times’ Dealbook explores the growing adoption of computer-driven, quantitative strategies in the world’s largest hedge funds. To combat “dismal returns and investor criticism over high fees,” hedge funds are increasingly replacing big-name investors with “teams of [Ph.D.s]” to develop trading algorithms. Can AI be far behind?
The American Banker’s Penny Crosman discusses the use of artificial intelligence (AI) by the Nasdaq exchange to “help it detect market abuse.” The exchange sees 14 million trades per day, an impossible number to review for humans alone. AI provides “the best detection mechanism possible,” said Nasdaq’s head of risk and surveillance.