AI-First Finance: Outlook 2025
Just a few years ago, the world was a very different place. Floppy disks were the consummate data storage devices, iPods were the "I-have-arrived" signature in the cool kids tent, and AI was called the technology of the future, a future that was always far off in the distance. That future is finally here. AI is no longer a plotline in science fiction; AI is here and evolving. Fast. From self-driving cars to facial expression recognition and detection, AI is here with us, and its power and influence will continue to grow rapidly in the coming years.
Over the last three years, since a worldwide COVID-19 pandemic was declared, the forces of big data and AI technology have combined like never before. While not a day goes by without news flash of cutting-edge breakthroughs in vaccine development robotics and AI, a quiet revolution has been taking place in the field of computational finance.
Not too long ago, algorithmic trading was only available to the chosen few — the big players with deep trading chests — but recent developments in the areas of open source, open data, cloud computing, and online trading platforms have evened out the playing field. It is not uncommon now to see a stock trader, armed with just a typical notebook, a shoestring trading account, and a reliable internet connection, executing trading algorithms while sipping on something that comes with a small umbrella on top, on a hot beach day.
Machine Learning (ML), the jewel in the crowd upon whose shoulders we stand, has pulled a similar stunt. Forecasting, testing market models, designing trading strategies — all these tasks are being carried out by ML technologies.
In 2021, according to Fintech News, financial institutions spent more than $200 billion on ML applications to help prevent fraud and assess risk, a figure that is projected to increase steeply in the coming months.
Deep Learning (DL)—they say when DL shows up, ML leans forward (whispers), "hey good-lookin’, don’t you think, maybe we can find us a brand new recipe?" She's the new girl in school who’s trying her best to stay away from the drama. DL’s potential is unrivaled.
Musk, the only voice crying in the wilderness: “Prepare the way, make straight the path — with some form of regulation, or its resemblance.”
It is a bit of nuclear power at your private disposal. It takes the form of a neural network with many internal layers. Currently, it is being used to make predictions and classifications on structured data such as stock market data, a growing influence on the future of trading. The arms race in deepMind is heating up.
"This is the best of times, this is the worst of times, we had everything before us, we had nothing before us." Charles Dickens.
To echo the words of Dickens, this is the best of times for fund managers, traders, and investors who manage to take advantage of AI, they’ve everything that ensures not only their success but also puts them ahead of the curve in the industry. This is the worst of times for those who are left behind, those who fail to read the moment correctly and respond appropriately, their financial acumen and terbanacles shall fade away, off into the sunset.
AI, the tempest is raging, the billows are tossing high — a force so potent cannot be ignored. We cannot wait for everything to line up so we can move forward or negotiate our way out. The time to show up is now, to imagine more, to think more, to learn, unlearn and relearn, to get innovative and reap the rewards of the full machinery of AI.
The future will not be shaped by those who watch and wait, looking above and lost in their heydays - perfect submission, the future will be determined by those who understand the moment, that they are here for such a time as this, those who dare to ask: why, why not, what if, how about!
Although AI-First Finance is a niche that stands at the intersection of computing and finance, the synergy between the two fields could immensely revolutionize the way investment decisions are made. It underscores how financial knowledge and AI knowledge could work together to achieve what neither a finance expert nor an AI expert could achieve on their own. Now, finance students and practitioners may ask:
Where could finance benefit from AI? If I am a trader, a fund manager or a risk manager, how can I use AI techniques to gain an edge over my competitors?
Computing students and practitioners may ask: Where and how could AI contribute to finance? If I am an AI expert, where can I contribute my knowledge to a financial institution?
The rookies, the uninitiated, the fence-sitters or even those righteous souls who choose to look on the other side — on that treacherous road to Jericho, may ask:
How is AI affecting our lives? Why should we even care? What is AI anyway?
Legitimate questions, valid concerns. No one has clear-cut answers, and neither do we claim to have found any. In the words of Paul, we count ourselves not to have apprehended it all, but there is this one thing we do: failing early, failing often, and stretching forward to the promises that AI-First Finance holds.
In the next series of articles, we'll walk you through each category, providing real-world applications as well as attempt to illuminate areas where researchers and practitioners are hardly addressing. This material encourages readers to think outside the box, readers with AI or Finance knowledge will not only gain a new appreciation for the ground swelling potential AI holds, but also light a new fire in the field of computational finance.
Join the conversation