Investments and technology: The rise of machines



When was the last time you actually stood in line to get something done? Chances are, not in the recent past. Nearly everything is digitized today, all thanks to the rise of machines - a phenomenon that’s sweeping across sectors, industries and business processes. You can order groceries online, you can get your taxes filed online, and today, you can even keep in touch with someone halfway across the globe digitally.

And as is the case everywhere else, there has also been a rapid rise in the use of machines in trading and investing. More specifically, Artificial Intelligence and Machine Learning - often abbreviated to AI and ML - are transforming the way people invest.

The rise of machines in investing

Have you ever visited an investment provider’s website and had a chatbot ping you ‘Hello!’? That’s AI for you. It may be a very basic use case, but it’s just one of the many ways in which machines and technology are starting to transform the way we invest. The popular belief is that the use of AI and ML in investing is still in its nascent stage.

The numbers, however, tell us a different story. The Economist Intelligence Unit surveyed over 400 businesses in several key markets across the world, and the results show us that 27% of the companies surveyed have already adopted artificial intelligence. And around 46% have at least one AI pilot project in the works.

Deloitte also conducted its own AI survey, and the responses revealed that around 70% of the companies offering financial services use Machine Learning for processes like detecting frauds and predicting cash flows.

How is technology transforming the way we invest?

The use cases of AI and machines in trading and investments are increasing day after day. When we take a closer look at how technology is transforming the way we invest, we make some interesting discoveries. Here are some areas and ways in which technology has upgraded the investment process.

  • Automated insights for better portfolio management
  • Analysis of customer data for more personalized services
  • Easier and more efficient risk assessment 
  • More accessible professional advice and insights
  • Smoother and faster application and settlement processes

The benefits of using technology in investments and finance

The advantages of using technology in investments and finance are far-reaching. Here’s an overview of how the rise of machines can actually turn things around for the better.

  • Increased productivity
    AI can do things extremely efficiently, there’s no doubt about that. Studies have shown that AI is particularly effective at repetitive tasks, which take up around 60% of the employees’ time, in general. If AI takes over these tasks, employees will have more time to focus on those high-value jobs that actually need the element of human interaction and intervention.

  • Reduced operational costs
    Machine-based processes can help cut costs greatly. Insurance is a prime example of this. It’s an open secret that online plans cost less than offline insurance plans. Additionally, the use of AI and ML in investments can help reduce the element of human error. And these savings are ultimately passed on to you - the investor. So, it’s a win-win situation.

  • Better customer experiences
    Interestingly, machines also make customer experiences better. Data analytics is the MVP here, because when companies collect customer data and understand their behaviour better, it becomes easier to tailor their products and processes to suit what the customer wants. And that directly translated to higher customer satisfaction. Investment companies can make use of this tech to help investors have a smoother journey from start to finish.

  • More personalization
    Investment products are also becoming increasingly personalized these days, thanks to the use of machines in trading, investment and finance. A range of investment products can be customized according to the investor’s needs. Marketing has also become more personalized, as technology takes over.


Wrapping up

When you think about it, there are so many ways in which investments and financial processes have radically transformed with time. Chatbots, personalized emails, automated responses, auto saving of data are just the beginning. Trading has also evolved to include rule-based strategies. Want to know more about that? Check out the next chapter for the details.

A quick recap

  • Artificial Intelligence and Machine Learning - often abbreviated to AI and ML - are transforming the way people invest. 
  • Automated insights for better portfolio management, analysis of customer data for more personalized services, and easier and more efficient risk assessment are some ways in which tech is transforming the way we invest.
  • There is also greater access to professional advice and insights, and smoother and faster application and settlement processes.
  • The benefits of using technology in investments and finance include increased productivity, reduced operational costs, better customer experiences and more personalization.

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The initial costs of implementation may be on the higher end for some solutions. Also, the need to upskill existing workforce and ensure data protection are other areas that need to be focused on.
The goal of using AI and ML in investing is not to replace humans, but to empower them. So, technology may never entirely replace the human workforce. They would simply coexist alongside each other.
Most definitely. Earlier, investing in the market involved the open outcry system and long, laborious manual processes. Today, transactions are instantaneous, digital, and can be carried out from the comfort of your smartphone.
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