AI tools hold the power to disrupt the mutual fund industry and advisory services in India and perhaps globally
While AI investment tools might have certain shortcomings due to the unpredictable nature of the equity market, they can process massive amounts of data, and monitor investments 24*7
If you are on social media or a regular blog reader, there is no way you can avoid articles about artificial intelligence. It is everywhere, and everyone has something to say about it. Before we go any further, it is critical to understand that not every AI system is advanced enough to cause societal disruption. The reason is that there are different AI types, and the capability of a system will depend on the design type.
The Different Types Of AI
- Reactive Machines: These systems only react. They do not form memories. They make no use of previous experiences when making new decisions. An example would be the Deep Blue machine, a chess-playing supercomputer created by IBM.
- Limited Memory: These systems reference the past, and information is added over a period of time. The referenced information is short-lived. An example would be self-driving cars.
- Theory of Mind: It covers systems that can understand human emotions and how they affect decision-making. They are trained to adjust their behaviour accordingly. These have not been fully achieved, but autonomous cars are a perfect example of working in this category.
- Self-awareness: These systems are designed and created to be aware of themselves. They understand their own internal states, predict other people’s feelings, and act appropriately. ChatGPT would be one example of this.
The AI Disruption — ChatGPT & Investing Tools
Who would have thought an AI system created by a startup could challenge a tech giant like Google? ChatGPT has shaken the foundation of Google. Many news outlets have reported that Google’s CEO issued ‘Code Red’ after the initial success of ChatGPT. A few years ago, if someone had predicted that an AI system would challenge Google’s advertisement business, most people would have laughed it off.
ChatGPT is yet to officially challenge Google, but industry experts believe it may do so soon.
Another industry where artificial intelligence has found a stronghold and may cause disruption is investing. Most investors in India choose the mutual fund route for equity investment. The reason is that equity is risky, and they lacked the necessary skill set to invest directly in the market. Another option for investors is to opt for traditional advisors and Portfolio Management Services (PMS). However, these services are beyond the reach of retail investors.
We have quite a few AI investment tools available in the market that investors can use for investment in the stock market at affordable rates. Such AI tools hold the power to disrupt the mutual fund industry and advisory services in India (and perhaps globally).
When it comes to technology, it is difficult to predict the future. As of now, we have only seen the tip of the iceberg — what may come tomorrow is difficult to comprehend.
Are These Tools Perfect?
AI is not perfect. Many instances point to ChatGPT providing irrelevant and incorrect responses. It also cannot answer questions about sensitive topics, which is understandable to an extent.
Another problem with a platform like ChatGPT is its cost. It will cost the company one cent for ChatGPT to generate an average response of 30 words. Through such an estimation, OpenAI (the company that created ChatGPT) may be spending at least $100K per day or $3 Mn monthly on running costs. Massive, right?
AI tools in investing cannot be perfect. This is not because the tools have shortcomings but because of the unpredictable nature of the equity market. They can make mistakes, but so can human investors. Given that AI tools have no emotions, can process massive amounts of data, and monitor investments 24*7, they will always outperform humans in the long run.
Being part of the industry and working closely with an AI system, I am confident, in the next few years, we will have more advanced AI systems. AI will find applications in almost every industry.
Source : https://inc42.com/resources/how-ai-is-reshaping-indias-fintech-industry/