What’s the difference between a fund analyst and a computer?

Very little apparently!

Personal investing options

Personal investing options

Back in the late ‘90’s, when I was still a credit underwriter, I worked on a project that I thought was a little bonkers.

The project was to evaluate the precision of automated underwriting software and how it compared against the job that the regular underwriting team did.

For some time, we had all known that different underwriters took different ‘views’ on various applicant credit risks which resulted in pricing anomalies.

The company behind the new computer-based programme was Fair Isaacs. The new computer programme and the credit score it presented was its FICO score and to say that there was a lot of around-the-office scoffing at the idea that a computer programme could replace their job was putting mildly.

But, as Fair Isaacs persisted and time went by, the computer won. Today, automated credit grading is how creditors make decisions on millions of loan applications across the US.

As automated technology takes a greater slice of the financial services action, algorithms are replacing some of the traditional work of traders, clerks and financial advisers and now, a collection of market innovators and tech startups are employing artificial intelligence (A.I.) to actually write news stories and financial reports.

There has been a high degree of dismissal among investment analysts that their job, their unique skill of identifying investment risk nuances contained within the forest of financial data could NOT be undertaken, completed and reported on by a computer programme.

But now, it looks like many major Wall Street brands, with the help of innovative start-ups are calling their bluff.

Names such as Narrative Science Inc., and Automated Insights are adding some Wall Street big hitters to their client list as providers of report services and a way for those brands to reduce analyst costs. For example, Narrative Science’s extracts data from filings, databases and internal documents and then use A.I, to synthesize the information for corporate presentations or product descriptions. Generally, the software can produce information summaries quickly and cheaply, enabling businesses to publish more reports and marketing materials.

Brands like UBS produce an estimated 30,000 research reports each year…that’s a lot of cost for any bank and with increasing pressure on banks for greater efficiencies, my money is on the computer.

So, with computers increasingly taking on the role of investment adviser through ‘robo-advisor’ services as now edging their way into the sanctum of job of analyst and report writer, I need now is a computer to do my commute and earn my income for me!

 

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