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Paving way for AI –
Artificial Intelligence (AI) is an outcome of advanced computing, abundance of large amounts of data and a quantum leap in rule based algorithms and techniques. AI is a new age technology that has evolved over time with many technologies emerging from it as a subset and making its way into different industries. Robotic Process Automation (RPA), Natural Learning Process (NLP) and Machine Learning (ML) are supported by AI that we use to our advantage to automate the repetitive tasks with least human intervention but with little intelligence of its own.
AI has been gradually paving its way through face recognitions, automated online shopping suggestions on our gadgets, curated playlists and seamless navigations with Google maps.
AI is now rapidly revolutionising the financial services industry with its enhanced capabilities. It is reinforcing the financial advisors with better portfolio management services to their clients. The rising participation of tech savvy millennials in the Indian capital markets and their huge demand for instant research and insights has been a driving force for the change.
Jarvis Invest is India’s first AI based advisory platform designed for retail investors for wealth creation. Jarvis analyses 12 million financial parameters to build a customised portfolio for its clients with risk management in place.
What gives AI an edge in Indian capital markets?
Stock selection by AI – Investors have to take help of their financial advisors that involves some bias. While AI conducts an unbiased extensive research by analysing millions of financial, industry and global parameters with an embedded risk management system and offer stock recommendations to an investor based on his risk appetite, investment horizon and the amount of capital to be invested.
Personalised portfolio – It is complicated for investor to comprehend the language of investing leading to over reliance on financial advisors to build customised investment portfolios. While AI takes into account a gamut of media coverage, research reports, corporate announcements, etc. to give an intelligent insight to the investor and ensures a concentrated portfolio.
Risk management – An investor is unable to mitigate the timely risks and fails to fetch good stock returns that beat the indices in the long run. But AI is round the clock 24/7 focussed on mitigating the risks to deliver better returns and promptly responds to client queries.
Portfolio rebalancing – Fund managers or DIY investors wait for quarterly or yearly rebalancing which could be error-prone approach. While AI tracks trends and patterns that humans may not spot. AI recommends only when the portfolio demands a rebalancing.
Compliance check – AI can raise the red flags in case of violation of compliances and regulatory norms by the financial advisors.
AI as a Partner –
Human advisors are becoming redundant and small sized investment advisory firms have closed down due to free and digital applications and platforms that gives instant valuable insights.
Nevertheless, there is going to be the need for people who are qualified in mathematics, economic engineering, statistics, computer programming who would have to master the confluence of economics with technology. Highly skilled humans with specialised skill sets will have to design smarter machines and codes to help build complex strategies.
AI is needed to automate the mundane repetitive tasks like back end operations in the stock market that consumes a lot of time thereby lowering overhead costs. AI will enhance the analytical capabilities of human beings for better and informed investment decision making.
Humans are needed for emotional support and expert verification. They are required to meet clients and getting to know their real needs.
AI will improve customer satisfaction, provide greater access to advanced options for investors and affirm that financial advisors give AI-backed digital financial advice and fits to client’s best interests.
Conclusion –
Hong Kong, Japan and Singapore have already embraced AI in a bigger way while India is in early stages of AI. The economic conditions and regulatory norms of countries will determine the pace of adaptation of AI, particularly in Indian markets. In developed countries, AI gathers all documents, research reports and uses natural language processing to predict future trends and structure an investment thesis all by itself. AI based algorithms are linked to stocks and alternate asset class products and then provide a complete investment solution.
Robotic advisory services led by AI have begun shaping the mind-sets of traders and investors due to evolving demographic dynamics in the Indian capital markets. Algorithmic trading system already contributes 50% of trading volume in Indian markets and are trying to make their trading platforms smarter and quicker to use with the help of AI/ML tools.