CFA Institute Says Firms Must Act Today to Take Advantage of AI and Big Data Opportunities
CFA Institute has announced in its latest global report that relatively few investment professionals are currently using AI and big data applications in their investment processes.
The report, entitled AI Pioneers in Investment Management, surveyed investment management professionals, revealing that progress in adopting the technology has been slow.
The report examines issues related to the adoption of AI and big data in the investment process and proposed solutions to resolve them based on best industry practices.
Larry Cao, Senior Director, Industry Research, CFA Institute, said “The investment community is keen to tap AI and big data’s potential to deliver on Fintech’s promise to take the industry to the next level. We subscribe to the power of the ‘AI + Human Intelligence’ model, and see that successful firms will be centered on T-shaped teams that combine investment expertise, innovation and technology applications across investment strategies or processes.”
According to the report, progress in deploying AI and big data has been slow despite management’s enthusiasm. A survey cited in the report shows a clear disconnect between AI plans and use. Based on the survey, only 10% of the portfolio managers who responded to the survey used AI/ML techniques to improve their investment process in the past 12 months.
The report points out that the machine is only as intelligent as the data it learns from, and ML techniques are best suited to systematic strategies. Unstructured and alternative data are typically used more by discretionary managers.
The major challenges in adopting AI and big data analytics in the investment process have been named as cost, talent, management vision, namely the reluctance to deviate from tradition, and time.
The CFA institute’s report recommends that AI plus Human Intelligence (HI) is the future of work, saying that organisations and investment professionals alike must acquire and constantly improve their skills to remain effective in the face of the technology disruption posed by AI and big data.
It goes on to state that Investment professionals in future should be prepared to work in integrated technology and investment teams (AI+HI), and that Investment teams in future will need to reorganise as “T-shaped teams” to succeed. Such teams will offer broad and deep knowledge with wider connections, understanding, perspectives and collective intelligence that rely on a collaborative culture and diversity of expertise in both investing and technology across the team.
“The way forward for investment professionals is to adapt and be conversant with the new technologies,” Cao explained. “Successful investment professionals in the future will be able to work efficiently with data scientists on their teams – while not needing to become data scientists themselves. It takes time to develop and adopt AI and big data applications, which makes it a compelling reason for all aspiring investment firms to act today.”
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