The future of trading will be created by people and machines working together, not in competition. Our series with Greenwich Associates on trading desk innovation concludes with a look at the right blend of AI and data analytics and human intuition.
- About 80 percent of professionals surveyed for a Refinitiv/Greenwich Associates report on the future of trading said that innovation offered many new opportunities.
- Investing and trading decisions will still need to leverage human intuition, while data analysis and trade execution will be automated and increasingly efficient.
- Freeing up about 20-25 percent of capacity from manual processing means portfolio managers, analysts and brokers will have more time to generate ideas and work with clients.
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When it comes to the future of work, innovation is often met with skepticism no matter how awe-inspiring it appears.
In the concluding report in our series on the trading desk of the future, Refinitiv and Greenwich Associates debunk many of the fears about machines taking over the world.
They describe the future of trading and financial services as a true merger of the best of both humans and machines, where investing and trading decisions leverage human intuition while data analysis and trade execution are automated and increasingly efficient.
To better understand this evolution, let’s take a closer look at the report’s key findings.
People are still in charge
Despite advances in AI and data analytics, people are still in charge. In fact, as technology becomes increasingly sophisticated, new opportunities for top-tier talent are emerging.
It’s apparent that the source of this talent has been shifting for years now. While finance has been the most common educational path to the trading profession, it’s certainly not the only one.
About 56 percent of financial markets professionals have finance degrees, but computer science and engineering backgrounds are increasingly prevalent and gaining.
The reason is that new solutions require deep knowledge of both financial markets and technology.
The ‘digital natives’ will be the ones who understand the technology and are more attuned to and willing to explore potential innovations.
As a result, we’re seeing more quants, data scientists and programmers in the field, who are focused on advanced analytics, algorithms and process automation solutions rather than user experiences.
Accelerating career growth
Technology is not replacing humans, but rather enhancing their work experience. About 80 percent of the finance professionals surveyed for this report felt that innovation offered many new opportunities.
Half say it has even accelerated their career growth. And this is not just true for younger generations.
In fact, 60 percent of Gen Xers feel technology has reshaped their career in unexpected ways, significantly higher rates than either baby boomers (41 percent) and millennials (48 percent).
Why the shift in perspective? In the next three to five years, two-thirds of finance professionals expect about 25 percent of their jobs to be automated. Any time a job is lost to automation, another exists to build and maintain the new process or technology.
Freed from mundane tasks like manual processing, portfolio managers, analysts and brokers have more time to work one-on-one with clients and focus on activities that save costs, add value or increase revenues.
Identifying investment ideas
Technology innovation promises to make capital markets and interaction between people more efficient. The buy side will continue to look to the sell side for market color, capital commitment, research and other value-added services.
As trade ideas morph into idea discussions, the sell side is expected to increase the use of digital communication tools to chat, discuss trades and collaborate more broadly.
In this new market environment, traders will become execution consultants, while portfolio managers will rapidly identify, evaluate and test investment ideas.
Machines will do the data consumption, deep analysis and execution of trades and investments while humans will work with customers, identify nuanced opportunities and negotiate and manage relationships.
Building trusted relationships
The nature of work is undeniably changing. In fact, the importance of trusted relationships has never been so pronounced as it has been during the COVID-19 pandemic.
Markets and institutions, globally, have had to grapple with new ways of working during this time of historic volatility and uncertainty.
Capital markets are still, and will continue to be, run by people, for people. It is people who will need to program the robots and talk to customers. And it will be people who build trust, engage in personal interactions and identify the next ‘big idea’.
More than ever, It is the people working in the financial industry who are providing that calming voice to worried clients facing unprecedented market movements.
Discover the future of trading
Just like innovations of the past, today’s technology will not make humans obsolete. They will become normal ways of doing business. How well financial firms adapt and evolve will determine who succeeds in the digital age.