How Pervasive Will Automation Be In The Future Of Finance?

Posted: Mar 14 2017, 1:57pm CDT | by , Updated: Mar 15 2017, 5:38am CDT, in News | Misc

 

How Pervasive will Automation be in the Future of Finance?
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Automation is beginning to play a far greater part in all kinds of areas of our lives, and this is something that has become a favorite topic of debate for a lot of people: just how close are we to being able to create robots and programs that can replace many of our skills and roles? Are computers already better than us at making certain types of decisions?

Automated Investment

In the investment world, the abilities computers can have to perform complex and in-depth analysis has outweighed what even the most talented mathematicians and statisticians can do without them for decades now, and so the idea of programs being able to make investing decisions is really nothing new or surprising.

However, what has been occurring more and more in recent years is investors using software not only as a tool to inform their own decisions, but as something that can decide upon and execute trades on their behalf. With many trading platforms in markets like forex, stocks and commodities offering 'robo-investment' tools, more and more people are trusting in the predictive and analytic skills of computer programs when it comes to their own money, and this is a trend that has been showing at every level, from casual hobbyist investors right up to professionals.

Why Investors Love Automation

At first pass, it may seem like these investors are putting a scary amount of faith in their automated investing tools, however the benefits, both practically and psychologically, are significant.

Automating investments means that you can configure your tool to work within the parameters you yourself would, however trades can be executed at the exact moment you would consider optimal within these without you having to be logged on or constantly following data yourself. In this sense, delegating the execution and decision making to a computer makes trading less intensive as an activity, and can effectively be left to work for you while you do other things.

The other side to it is that by allowing an automated tool which is based on the best data analysis you believe is out there to make decisions and execute trades on your behalf, you face less stressful decisions, and should things not turn out the way the software predicted, you at least have the peace of mind of knowing that you didn't make a bad choice – your trade did seem like the best move based on known data and trends.

Will All Investment Be Automated in the Future?

The interesting thing about a world where all investment was automated, would be how this would actually affect the markets. Computers would effectively be trying to predict the behaviors of other computers, and data scientists concerned with investment software would be in a kind of arms race to create products that did this the most effectively. It may then, sound like the markets won't need us at all, and our economies would be at the mercy of software (which may, in some ways, actually sound like a more stable situation).

However, what shouldn't be forgotten is that the human factor can never be removed from the markets. Markets are not about soulless movements of money, but about real businesses run by real people, and real currencies affected by human issues and the activities of the people within the societies that use them. A future where most or even all trading was decided upon by robots on behalf of their investing masters would still, therefore, have much of the same unpredictability that makes investing the risky yet fascinating thing it always has been.

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The Author

<a href="/latest_stories/all/all/2" rel="author">Luigi Lugmayr</a>
Luigi Lugmayr () is the founding chief Editor of I4U News and brings over 15 years experience in the technology field to the ever evolving and exciting world of gadgets. He started I4U News back in 2000 and evolved it into vibrant technology magazine.
Luigi can be contacted directly at ml@i4u.com.

 

 

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