Startups believe in digital and consider robo-based platforms much more than the incumbents that stand in the face of the opportunities provided by artificial intelligence in the field of finance. This is the Italian panorama told and commented during the event “AI: myth or reality” organized by Euclidea and hosted by the Fintech District last week, opened by Laura Grassi (Osservatori Digital Innovation) called by the CEO of Euclidea Luca Valaguzza to outline the current Italian situation before exploring scenarios below the horizon.
Grassi illustrated the different ways of using Data Analytics in finance within banks and financial institutions and their market sector by sector (6% in insurance and 29% in banking). Currently the macro areas in which AI impacts the most remain Marketing and Product Design (43%), Customer relations (27%), Fraud and compliance (15%).
The Italian startups using AI for their activities “passed their exams” compared to the rest of Europe and North America: according to Grassi “they have an aligned offer, the difference lies in the financial culture of their customers: very low. In Italy there is a great inability to understand even basic concepts and therefore to choose different paths”.
Giovanni Sandri (BlackRocks), another speaker of the meeting, pointed out that among the incumbents there is “too much tendency to trivialize the theme of AI” but fortunately “many leaders are realizing their true potential“. “In Italy we are far behind on investment in AI, although there are positive exceptions – explained Sandri – In general, we only look at how to reduce costs and steal customers from competitors instead of working on revenues and increasing customers. There is a short-sighted vision that exists throughout Europe. Who is taking the topic seriously is China”.
Sandri then cited Jody Kochansky, BlackRock’s Chief Engineer, about the impact of AI on finance: “Artificial Intelligence is already shaping the way we interact with the world. In finance, the change may not be so visible, but the potential is equally if not more powerful”.
In this regard Luca Berlanda, Portfolio Manager of Euclidea, recalled that “Until a few years ago, everyone was disillusioned about the potential benefits that finance could derive from artificial intelligence. Lately, however, hedge funds have returned to believe and invest in AI, perhaps after the successes of technology in other fields, such as automation or robotics”.
It is a welcome return, but it must be remembered that from a practical point of view we are talking about non-comparable contexts. In finance it is not possible to try and try again the experiments in very similar contexts as it is done for example for autonomous driving. A single day can nullify returns and affect all statistics for a whole year and, for machine learning algorithms, this makes a big difference.
Berlanda explained that, in the funds selection process, Euclidea uses both “traditional” algorithms and artificial intelligence techniques. “In our fund ranking algorithm, the degree of discretion remains high and we support our algorithm of machine learning and deep learning techniques. The goal is to predict the funds that will be found in the first quartile in terms of risk-adjusted metrics, delegating to computational techniques the search for critical variables to find the best funds”.