Quote by Stephan Hawkins:

“If people design computer viruses, someone will design AI that improves and replicates itself. This will be a new form of life that outperforms humans.”

The rise of Machines and AI is Fast Approaching

The rise of the machines was always going to come at a cost, as each wave of technology destroys what has been put in place. The frenetic pace of technological development in the areas of artificial intelligence and robotics is causing massive shifts in the finance industry.

The impact is already being felt on Wall Street, where there have been far-reaching and significant changes, with technology eliminating many jobs by replacing hundreds of humans with either robo-advisers or software.

Many investment banks and big institutions, in a bid to cut cost and improve efficiency, use AI to automate financial tasks usually undertaken by humans, such as wealth management, operations, risk management, and algorithmic trading.

One of the areas that the Wall Street has seen the greatest disruption of robotics and AI is the execution of buy and sell orders, where robots carry out between 50% to 60% market trades, according to CNN, citing data from Art Hogan. Hogan is the chief market strategist for B. Riley FBR.

The preference for technology over human traders is premised on the inability of the vast majority of traders to act consistently rationally when trading. Often, people fail to control themselves, allowing emotions to get in the way of their thoughts and actions.

Machines don’t suffer from these psychological issues when a major trading decision is being made. This is because they remove emotion from short-term trading activity, allowing for a more objective approach to trading.

Laying a Claim to the Future of Investing

Artificial intelligence and robotics is fast advancing into the investment sector, where its incredible ability to learn and think will eventually make them the most advanced and complex investment systems capable of helping corporations to make more efficient and effective choices.

For instance, advisory bots are increasingly being used by companies to assess investments, deals, and strategies in a fraction of a second, much faster than any human quantitative analysts using traditional statistical tools.

Such is the growing dominance of robots in the finance industry that former Barclays boss, Anthony Jenkins warned they could displace half of the workers in the banking sector, and lead to branch closures.

Activities such as calculations based on structured data and other repetitive support tasks are the most susceptible to automation because robots are well-suited for them.

There’s Still a Place for Humans in a Robotic Wall Street

While AI is probably the most robust technology there is today; its ability to perform complex tasks is limited. Trading machines can only learn historical data and trade patterns. However, stock market behavior changes all the time and computers can be less adept in the face of unexpected market performance.

Humans can easily adjust themselves to these changes. Getting the robots to do the same, however, will require changing their algorithms, which can be too expensive and time-consuming. For this reason, humans will always be a step ahead and remain relevant.