AI in Digital Wealth Management: Sniffing out investment opportunities

Economist Andrew McAfee concludes in his TedTalk “What will future jobs look like?” (already 3yrs old) that “The new ‘algorithm enabling’ technology is here today, and banks could use it to fundamentally change the value proposition for their customers.”

Oscar Wilde said that:

“The future belongs to those that can recognize opportunities before they become obvious”.

Artificial intelligence, which encompasses these days all sorts of ‘algorithm enabling’ technology, is creeping into our lives. Asset management and wealth management is no exception. Mentors at Fintech accelerators are advising entrepreneurs to drop the idea of creating the next Bloomberg and are suggesting a focus on AI finance. The big bang isn’t happening yet. It will happen (despite our human predictive unreliability) and I foresee it unfolding incrementally.

Incremental changes in financial technology and in customer preferences & profiles, are going to make-up the new era, the “Second machine age” era.

We celebrate today pigments of these fintech incremental changes because they are shaping our future.

NLP

The financial answering machine, Kensho, which we profiled a year ago in Kensho: Warren is like Watson and Siri, for analysts, investors and traders, is using a natural language based algorithmic technology. It is clearly a threat to financial analysts and to asset managers, whose ability to process and interpret financial information maybe replaced by a machine. Kensho and Aylien based in Dublin, are both faster and can extract value from text by using deep learning techniques. They process news and media info, research and business documents. Palo Alto-based Sensai, also uses natural language processing to help companies analyze unstructured data, such as corporate documents, transcripts and social media.

Sentiment analysis

Focused on sentiment analysis that use NLP and statistics and machine learning, Sentifi, is a Swiss based company that uses crowd sourcing algorithms to provide actionable investment advice to large financial institutions and to financial media companies. They currently offer 4 products: myMarkets; myPublishing, myCompany, myScore.

Amareos from Hong Kong, also contributes to financial decision making based on sentiment analysis (heatmaps and data visualization) with a tilt towards analytics and indicators used in trading systems and risk monitoring.

Combining sentiment analysis from crowd sourced data & quantum encryption, Running Alpha is offering a smarter way for seeing investment opportunities before they get noticed; helping investors be first at exploiting high-impact performance trends with confidence. They offer two sophisticated heat map products classified as Sentiment-Aware Portfolio Solutions: the Grid 100 and Focus 15. A subscription based service for retail and asset managers to generate alpha by shedding light into dark information (dark through a human eye lenses).

Predictive analytics

EidoSearch, a Canadian company using advanced pattern recognition by processing large data sets (crowd sourced info) and producing probabilistic predictive analytics. They recently announced a partnership with Stocktwits, to enhance their idea generation and risk management abilities; bringing to the masses more power to uncover investment opportunities before they are all priced in.

I know First, provides daily investment forecasts based on an advanced, self-learning algorithm. Their predictive analytics are based on Artificial Intelligence and Machine Learning with elements of Artificial Neural Networks and Genetic Algorithms; results are delivered on your mobile; another enhancement for DIY traders.

Clusters in real-time

For professional traders, to protect themselves from dark or speedy events like those hidden in HFT trading, flash cards, and other algorithmic activities; AbleMarkets research that can be used by fund managers, family offices, brokers and exchanges.

Another U.K. startup, AlgoDynamix claims it can warn you before the market undergoes a nasty selloff. It uses real-time data from exchanges, looks for patterns and searches for clusters of traders who are bailing out of an investment. AlgoDynamix provides clear and visual signals when sellers are gaining strength before a broad slide kicks in.

This is a taste of the powerful, even though incremental, changes in discovering investment opportunities. They are sourced from algorithmic enabling technologies applied in areas as natural language processing, behavioral finance, sentiment analysis, predictive analytics, pattern recognition. Business models of these Fintechs are mostly subscription based and democratize the space of such technologies that were strictly available to large institutions.

Celebrating AI in digital asset &wealth management, continues. We started with ten picks that are in the business of “sniffing out” in digital wealth management and changing the value proposition of financial analysts and asset managers: Kensho, Aylien, Sensai, Running Alpha, Sentifi, Amareos, EidoSearch, I know First, Ablemarkets, AlgoDynamix.