Review | Artificial Intelligence in Capital Market
On September 11th, NHC Distinguished Speaker Series (DSS) was honoured to invite Armando Benitez to share his experience and expertise regarding to the applications of Artificial Intelligence (AI) in capital markets. Armando holds a Ph.D. in Particle Physics (High Energies) from Michigan State University. Currently, he works with BMO Capital Markets as a director leading the data cognition team. Armando’s speech was composed of five sections, namely the importance of AI, the structure of AI team, the implementation of AI, the benefits and limitations of AI, and Q&A session.
At the very start of the speech, Armando demonstrated the definition of AI, a stimulation of human intelligence processes by a computer program or a machine to think and learn. Then, he suggested that AI has changed overall financial institutions, especially in the organization culture and company structure. A few non-traditional players, such as Facebook and Apple, have attempted to enter into financial industry, and thus it can be assumed a revolution in the financial market has begun.
02 The structure of AI teamArmando pointed out that a centralized team model is applied in the AI team structure, by connecting multi-line of business through company-wide platforms. There are five key elements of AI team, as per speech: 1) Business Leader, designing and leading the overall financial structures and planning; 2) Data Science Team (Data Engineer, Data Scientist, and Infrastructure), executing on the AI projects by preparing data, building models, and setting up access; 3) DevOps Team, providing IT supports to Data Science Team; 4) Visualization Team, establishing dashboard to realize practical AI business value; 5) AI research Team, seeking to understand with human-level intelligence by advancing the academic problems.
03 The implementation of AI
Armando explained two key business functions employing AI, namely capital market and wealth management. As for the capital market, AI can perform hedging analysis, risk management, volatility management, automate pricing, trade surveillance, client customization tools, and trade recommenders. As for the wealth management, it could help to identify the target customer groups by investigating customer personal information, such as postal code, salary, and personality, etc.
04 The benefits and limitations of AIArmando stated several advantages of applying AI in financial markets, such as creating new jobs, improving customer experience, increasing risk and fraud detection, enhancing price transparency, and optimizing operational efficiency. However, major limitations and constraints are indicated, such as overfitting issues, low data quality, over-customized software and unreliable tools, and costly infrastructure access. Moreover, data privacy issues are emphasized in the session as well.
05 Q&A sessionArmando discussed the importance of data quality, potential methods to address limitations of current AI technology, and the future of wealth management with the audience. Additionally, Armando recommended several possible ways to the audience to get to know more on advanced data analysis methods.Final Notes
Grant thanks to Armando Benitez for providing those great insights! We’d also like to thank the audience for their active participations. We hope young professionals and new graduates who attended this session could benefit from this great learning and networking platform built by NHC Distinguished Speaker Series. Please stay tuned. We will bring more high-quality events to you.
Author: Paris Xu
Paris is an active volunteer at NHC, an eager learner of financial industry landscape. Recently graduating from University of Toronto, Rotman School of Management, Paris holds a master degree of Financial Risk Management. Paris is actively seeking financial analysis position, especially in industry research, wholesale credit, and financial statement analysis.
Paris thanks to the volunteers’ group for the event: Yidan, Joyce, John, Jarvis, and Molly.