Once the domain of fantasy sci-fi flicks and academic theorists, artificial intelligence (AI) is increasingly part of our everyday world. Intelligent machines can now drive cars, challenge chess grandmasters, diagnose diseases and manage multi-million-dollar portfolios—and they’re still evolving. What does it all mean, for you, your firm and capital markets more generally? Let’s take a closer look.

From automation to intelligence

AI has been around for more than 50 years, but technological advancements coupled with the human desire for personalization at scale are driving new developments in the field. At Accenture, we define AI as a computer system that can sense, comprehend, act and learn. It’s especially that last part—learning—that has really improved in recent years.

Today’s AI uses sophisticated sensors to gather and structure data, and tools like natural language processing to understand human speech. When it comes to making decisions and acting on them, machine learning and robotic process automation has made it possible for AI to “learn” from data and respond to new situations without explicit programming.

AI and capital markets

In the early 1990s, capital markets firms began exploring opportunities to automate the decision-making process in their trading strategies. Today, most equity instrument trades on US stock exchanges are carried out by computers. But it’s the rise of big data that’s now truly changing the game. Where the human mind and traditional systems struggle to make sense of the vast quantity of structured and unstructured data available, AI excels.

For example, in the lead-up to the Brexit vote, Nomura’s Simplex used AI to sell Japanese stock-index futures while others were anticipating a market rally. Fast forward to the end of the day, when the Japanese market dropped to a five-year low and Nomura’s Simplex strategy resulted in a significant gain.[1] Other market players are getting in on the action too. Bridgewater, the world’s biggest hedge fund group, is starting a new AI unit that will use historical data and statistical probabilities to develop trading algorithms capable of evolving with markets over time.[2]

AI and your firm

Although the industry has focused primarily on AI’s trading applications to date, the technology has the potential for much broader application across the value chain. AI could be used to detect fraud and unauthorized trading as part of a firm’s regulatory compliance efforts, to select the best possible candidate in a recruitment campaign, or to cross-sell or up-sell clients based on their past transactions—and that’s just the beginning.

The financial technology, or fintech, scene is buzzing as startups seek to become the next Google or Facebook in the AI space. Case in point: More than 60 percent of the fintech finalists in Accenture’s most recent Fintech Innovation Lab leveraged one or more AI capabilities.

Established players are jumping on board too, teaming up with these innovators to leverage their technologies. See UBS using SQream to mine big data and deliver personalized advice to its high-net-worth clients, or Goldman Sachs using Kensho to predict how monthly labor market job reports will affect investment performance.[3] And the list goes on.

AI has the potential to deliver considerable benefits to a firm’s operations and financial performance. The key is knowing when and how to use it. The most successful firms recognize that technology is not a replacement for human capital, but rather a tool for boosting labor productivity and liberating human potential. At the end of the day, the technology shouldn’t be dictating your next move—it should be working for you.

If you would like to discuss this topic further or get additional information, please email capital.markets@accenture.com.


[1] https://www.bloomberg.com/news/articles/2016-08-21/hedge-fund-robot-outsmarts-human-master-as-ai-passes-brexit-test
[2] https://www.theguardian.com/technology/2016/dec/22/bridgewater-associates-ai-artificial-intelligence-management
[3] https://www.nytimes.com/2016/02/28/magazine/the-robots-are-coming-for-wall-street.html; https://www.bloomberg.com/news/articles/2014-12-07/ubs-turns-to-artificial-intelligence-to-advise-wealthy-clients?hootPostID=c299f3cb0fb170106b1ba3e52d8d128c