Nearly half of capital markets professionals around the world say their firms are already using AI in their trading processes, according to a Greenwich Associates report.
With 44% already using AI and another 17% reporting plans to implement it in trading in the next 12 to 24 months, a solid majority of market participants — including buy-side institutions, sell-side firms, exchanges, and others — soon will be using AI in the securities trading process.
In the longer term, four out of five of those quizzed by Greenwich expect AI and/or machine learning to be fully integrated into the trading process in three to five years, and that their firm will have internal AI expertise within that timeframe.
This rapid adoption is reflected in the fact that respondents rank AI as the most disruptive technology in financial markets, with millennials particularly sure of its impact in the coming years.
Yet, despite the market enthusiasm, only a very small percentage of current AI applications in capital markets are close to the complex products from Google, Apple and their peers. One of the biggest impediments to date has been data availability, says Kevin McPartland, head, research in Greenwich Associates market structure and technology group.
“Those global technology giants have access to the habits and data of billions of people around the world,” says McPartland. “Most financial services firms, on the other hand, are still working hard at normalizing the data they do have, are struggling to work within privacy rules surrounding customer data, and often work with such limited data sets that the output is still more art than science.”
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This is set to change, though, as investors, broker-dealers, exchanges, and technology vendors continue to improve both their AI platforms and datasets. More than 60% of study participants expect AI-focused budgets to increase.