Over 70% Of 160 Buy-Side, Sell-Side, Exchange/Trading Venue Firms Surveyed Are In Planning/Research Stage For AI Deployment; Majority Plan To Increase AI Spend In 2019, Says TABB Group
The drive for alpha and a need to increase efficiencies coupled with an explosion in the amount of data being produced in financial markets are behind the impetus driving capital markets firms to deploy cutting-edge data science, AI and machine learning (ML) techniques. This is according to TABB Group in a recent survey of over 160 buy-side, sell-side and exchange/trading venue firms to gauge their views on AI adoption.
Tim Cave, a TABB Group London-based research analyst, who wrote the summary report, “Big Data, AI and Machine Learning Adoption: Where Are We Now?”, says half of the respondents believe AI is the most disruptive to their business, followed by cybersecurity and big data technologies. “Given the buzz around topics such as digital ledger technology (DLT), digital transformation, cryptocurrencies and smart contracts, this may surprise some, but it reveals just how disruptive capital markets firms view AI and Big Data.
A sampling of findings from the survey includes:
· AI cited as the most disruptive technology to capital markets firms today
· Two-thirds of capital markets firms currently at planning/research stage of implementing AI
· AI/ML approaches being used primarily in investment decision-making process
· Concerns around data are the top challenge to implementing AI approaches
· Current budgets for AI are modest, but the majority of firms plan to increase spend on AI over the next 12 months
“Our survey revealed that the major roadblock to further adoption of AI approaches was data quality with over half of respondents citing this as their biggest challenge – it was a particular concern for the buy side,” Cave says. “Right behind data quality was talent recruitment, followed by regulatory/compliance issues, an understandable major concern for exchanges and trading venues, reflecting high levels of regulatory scrutiny under which they operate.”
The key takeaway finding from the survey according to TABB is that most capital market participants are bullish on the use of AI and big data in the near future. “It’s high on the change agenda at most firms, with the main use case being around the investment process, but also in trade execution and operations,” says Cave, adding that “challenges do remain in implementing AI approaches, particularly from a data quality perspective. The increasing reliance of machine over man is clearly a work in progress.”
A more detailed sampling of survey results can be found on TabbFORUM. The three-page report with nine exhibits is available for download by TABB Group equities clients and pre-qualified media at https://research.tabbgroup.com/search/grid. For more information or to purchase the report, write to info@tabbgroup.com.