AI has become a game-changer in Asset Management


AI has become a game-changer in Asset Management

  19-Oct-2020
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All that You Need to Know About artificial intelligence and its application in asset management. The artificial intelligence finds its applications in various fields. Currently, major areas where AI is gaining more attraction in financial assets management include investment banking, personal financial management, and fraud detection. With the advancement in technology, machine learning, and artificial intelligence, organizations are able to accomplish their financial assets more effectively. The rising demand for automation systems in financial products and changing customer behavior are the major factors that are leading to increased adoption of AI in Asset Management.

What is the function of AI in Asset Management?

The intelligence same as humans when mimicked by machines is called artificial intelligence. It is the branch of computer science that is involved in building a smart machine that is able to perform many tasks that usually require human intelligence. It makes it possible for machines to learn from the past.

In the field of asset management, AI adoption has brought a revolution. Since it improves the portfolio management and risk management practices by increasing efficiency and accuracy. AI is also beneficial in devising new trading signals to execute trades with minimum transaction input.

How AI works?

Nowadays artificial intelligence is gaining popularity and has a growing impact on the life of the people. So it is important to understand the working principle of AI. The working of AI is based on combining a large pool of data with faster processing and intelligent algorithm. This enables software to learn automatically from the features of the data collected. It is basically reverse engineering of human traits.

Subdomains of AI

To better understand the working and application of AI, it is important to know about the major subfields of AI. This will enable us to find the application of these domains in various fields of industries. Some of the sub-fields of AI are as follows:

Machine Learning

This allows the machines to learn to make decisions and interferences from past experience. It is helpful in identifying the pattern of data collected, analyze from the previous data, and infer a conclusion from that data to reach a conclusion. Machine learning evaluates the data and concludes without human interference.

Deep learning

It is a type of machine learning technique. Deep learning teaches the machine how to process the inputs of the data. It makes it possible to infer and predict the conclusion of data. It uses huge networks with several layers of processing units. It helps in learning complex patterns of a huge amount of data.

Natural Language Processing (NLP)

It is a science that allows reading, understanding, and then interpreting a language via machine. The machine first understands the input language of the user and then processes it and in turn, intends to communicate accordingly.

Computer vision

This contains an algorithm that will try to understand the input image by fragmenting it into smaller parts. Each part is the study by the machine to derive the final conclusion about the image. Computer vision is helpful in learning from a set of images in order to make better decisions.

Future of AI in Asset Management

The adoption of AI is resulting in rapid change across different industries. Artificial intelligence has gained attention in the process of automatization tools, cognitive automation, and natural language understanding. There is a possibility that AI has a valuable impact on the value chain, and real-time optimization of sales.

In the future, AI bots applied in both ends of transactions across the bank will make better investment and distribution decisions. Because of this, it will be possible for asset managers to focus entirely on client relationships and strategy of the business which in turn helps in improving the business.

Advantages of AI in Asset Management

  • It improves user experiences and interfaces.
  • It results in the advancement of operational efficiencies.
  • AI in Asset Management is beneficial in pre-trade control, development, and management of processes.
  • It is helpful in optimizing funds and executes the best support for the decisions made.
  • AI makes sure that it better predicts the operational failure and their remediation.

The bigger picture

The AI in Asset Management Market has been witnessing rapid growth due to the gradual adoption of process automation in the manufacturing industries. The automation system complemented with AI has many benefits such as improvement of drivers' performance, gives faster services, improved quality performance, and gives higher productivity. The application of AI is encouraging in streamlining the processes that can improve the decisions about investments. All these advantages are expected to boost the drive the demand for AI in Asset Management in the coming years.

The rapid surge in the use of connected devices, machines, and the adoption of the internet of things (IoT) is contributing to the growth of the market. Although, there are many risk factors accompanied by the application of AI in asset management such as operational risk, model risk, and technology risk. Favorable government initiative also boosts the implementation of artificial intelligence (AI) in several industries. The Global AI in Asset Management Market has been anticipated to rise at a growth rate of 41.1% CAGR over the forecast period.