Having worked in the banking sector for thirty years, I have witnessed many changes. However, it’s astounding how quickly things are changing these days. The financial and investment industries are combining with new technology, which is changing the way we make investments.
It’s time for us to examine the situation more closely. First, let’s address the big issue: machine learning (ML) and artificial intelligence (AI). Shrewd investors are rushing to get in on the action as these potent instruments are no longer just the stuff of science fiction.
Impact of Influencers
According to a new survey, a startling 71% of young investment professionals are actively looking for experience with artificial intelligence (AI) and machine learning (ML). They perceive these technologies‘ potential to improve portfolio allocation, produce alpha, and unearth insights from mountains of data.
However, the disturbance doesn’t end there. Especially for younger investors, the impact of “influencers” on social media platforms has become a major element in determining their investment behavior. These internet experts are influencing investing choices in ways that might not always be consistent with long-term financial objectives.
Not to mention how cloud-based platforms have made investing tools more accessible. With the help of these tools, retail investors now have access to real-time data and professional-grade analytics. However, tremendous power also comes with immense responsibility, since this change has also sparked worries.
It’s not all bad news, either. Prominent venture capital firms such as Tiger Global, Andreessen Horowitz, and Sequoia Capital are using artificial intelligence (AI) to sift through massive volumes of data, spot patterns, and find interesting transactions.
Necessary Strategy
Global venture capital investment in generative AI reached an astounding $21.3 billion in 2023, with corporate behemoths like Microsoft and Amazon giving a massive $15.3 billion to startups like Anthropic and OpenAI. And this is just the start; by 2024, it’s expected that investments in this field would total more than $12 billion.
But a calculated strategy is necessary, just like in any technological breakthrough. To prevent overconfidence, investors should carefully consider how AI can change target verticals and business models, make sure that these technologies are used ethically and responsibly, and be aware of their limitations.
The data is unmistakable: only 29% of systematic investors presently utilize artificial intelligence (AI) to design and test investment strategies, but over 75% of them plan to do so in the future, according to the CFA Institute. Furthermore, 64% of investment professionals already pursue or plan to explore developing their AI and ML skills, and among the younger group, that percentage soars to 71%.
