Robots Are Solving Research Issue for Banks

Given the cost associated with placing analysts on the ground in developing countries–“about the only places in the world where investors can get yield right now”– firms are using artificial intelligence to “automate swathes of the research process.” This according to a recent article in Bloomberg.

The article cites data-science companies such as Arkera and Sigmoidal, who believe they can use machines to sift through tens of thousands of news articles, government statements and social media accounts in a variety of languages to track developments and relevant information. Marek Bardonski, CEO of Sigmoidal when the article was published, argues, “The system can give an edge over traditional analysts working for financial institutions. Instead of getting 100,000 news articles, clients can get all the insights on one page.”

The article explains that, in Europe, the consumption of research information has changed since the so-called MiFID II legislation was implemented last year to stop the widespread practice of having research costs built into fees charged by asset managers. But according to Bloomberg Intelligence senior analyst Sarah Jane Mahmud, many investment banks still offer research for free because their clients refuse to pay for it. But the quality of the information has suffered, she says, because the analysis has been left to less experienced junior analysts. She said, “Asset managers now need to assess the value of every single research service to assess if it’s worth paying for, how much they should pay for it, and trying to filter the good from the bad.”