How Financial Services Can Benefit From Artificial Intelligence

Computational technologies are being combined and applied in a variety of ways, and taken together have eclipsed AI’s original promise, so Aite Group is introducing a new term for them: “inorganic intelligence.”

Boston, August 16, 2016 - Financial services, and capital markets in particular, have long been a computational-intensive industry, with paper ledgers long predating the computer. Financial firms were among the earliest adopters of the mainframe computer, relational databases, and the PC, and have eagerly awaited the next level of computational power. Can inorganic intelligence solve human problems using methods derived from aspects of human intelligence at a beyond-human scale and help financial firms take computing to the next level, further increase operational efficiency, and improve results?

Current regulatory mandates provide the most fertile ground for the immediate application of inorganic intelligence in financial services. Most notably for robo-advisors (related to the Department of Labor fiduciary standard), automated trade surveillance, and risk management.

Millennials’ organic appetite for automated financial services combined with the U.S. regulatory shift from a suitability to a fiduciary standard for retirement account management is driving robo-advisor technology. Implementing a fiduciary standard requires more human labor to adhere to additional details and processes. Similarly, the aftermath of the 2008 global financial crisis led regulatory authorities to mandate widespread surveillance in financial services. Such large-scale surveillance must be automated due to unique requirements such as structured and unstructured data, prevalence of compliance at trading desks, and effective precognition for slower, chunkier traded products. In both these instances, inorganic intelligence can make up for additional human labor needs and unique requirements inherent in regulation.

This is only a snapshot of the different ways inorganic intelligence can be harnessed to improve and assist the financial services industry. “Inorganic intelligence has the potential to be instrumental for streamlining client onboarding, mitigating and identifying cyberthreats, and developing more intuitive marketing analysis and operations analytics,” states Aite Group senior analyst David B. Weiss.

Aite Group’s recent report, The Dawn of Inorganic Intelligence in Financial Services, details the genesis of inorganic intelligence, outlines its technologies, and highlights multiple current and near-term applications in financial services.

To view a short webinar summarizing Aite Group's recent report, The Dawn of Inorganic Intelligence in Financial Servicesplease visit our website here



 

About Aite Group:
Aite Group is a global research and advisory firm delivering comprehensive, actionable advice on business, technology, and regulatory issues and their impact on the financial services industry. With expertise in banking, payments, insurance, wealth management, and the capital markets, we guide financial institutions, technology providers, and consulting firms worldwide. We partner with our clients, revealing their blind spots and delivering insights to make their businesses smarter and stronger. Visit us on the web and connect with us on Twitter and LinkedIn.

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Jennifer Molgano
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Aite Group

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