Artificial intelligence and robots may not rule over humans in the financial markets. Humans are believed to have the edge while making money, reveals new study while questioning doubts about the previous research.
Today, AI is being considered as one of the mainstream technology in the financial sector compared to that of the last decade. It is playing an important role in everything.
Even though the segment has become a significant part of our lives, the machine learning algorithms are still miles away when it comes to making financial decisions. A study conducted by Barbara Jacquelyn Sahakian, Wojtek Buczynski and Fabio Cuzzolin analyzed about two dozen peer-reviewed studies between 2000 and 2018. It found errors in cherry-picking.
The AI algorithms and machine learning have generated a vast amount of data from the market and market participants, but still it is not perfect in making investment-related decisions.
Disadvantages of AI
One of the biggest disadvantages of AI and machine learning is that it cannot think out of the box. It largely depends on the pre-fed data as well as past experiences. It is not creative in approach. Moreover, the ability to create a machine to simulate human intelligence requires plenty of resources and time. It is costly too. A huge deal of money is involved. It even requires the latest software and hardware to function in an updated format.
AI makes humans lazy. The repetitive and tedious tasks are implemented by the intelligent machines and humans least need to memorize these or solve puzzles. Humans start using their brains less and future generations may face problems.
Artificial intelligence follows no ethics and morality. These two are important features of humans and may not be incorporated into an AI. It will grow uncontrollably and probably wipe out humanity in the future.
Advantages of AI
AI largely reduces human errors and increases accuracy. The decisions are taken by information previously gathered. If the algorithms are programmed properly, AI makes the least errors.
Humans are usually productive about three or four hours while AI can work 24/7 and with the same efficiency throughout the day and night. Humans require breaks while AI doesn't. AI works endlessly without breaks and thinks faster than humans. AI is capable of performing multiple tasks at the same time and with accurate results.
Today, most organizations use AI to interact with their customers and this process minimizes the need for human resources as before. Companies can save money by employing fewer humans. Humans are driven by emotions while AI makes unbiased decisions. It is devoid of emotions. It is practical and rational too in approach.