Harvard Ph.D. graduate Evan Schnidman last year raised over $3 million in funding in which to accelerate his artificial intelligence (AI) business.
His machine learning programs were developed initially to help central banks analyse their policy statements.
Now, Schidman’s turning to the corporate world to do the same.
The AI startup is called Prattle and its services aim to boost productivity and generate a greater number of trading calls quicker.
“That report on the earnings call means that an analyst that’s struggling to keep up with covering 10 or 12 companies can cover 30 or 50,” said Schnidman. He says it’s about us working alongside machines, not about them taking over.
Back in October, we wrote about how research jobs are most likely to be replaced by machines.
More firms within the financial industry are using AI-based analytical tools. According to a recent survey, more than 60% of hedge funds that took part were already using some form of machine learning within their business.
And, it’s these hedge funds that are embracing the likes of AI that is rapidly growing.
As a showcase for what Prattle can do, Schnidman points towards the pharmaceutical company, Mylan NV. Before turning to the AI startup, the company was struggling, missing its quarterly estimates.
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However, with the help of Prattle it completely turned its business around. The stock rose by almost 5 percent and once shares were expected to outperform the rest of the market.
Using the funds it accumulated last year, the AI startup will expand its services to Australia, Hong Kong, and Japan. One of the benefits of using AI is that there are no human biases involved.
Even so, the human touch is still very much needed, especially when it comes to something such as reading the minutes of the Fed’s Open Market Committee (FOMC) meetings.
“The FOMC is not a democracy, not all participants are created equal, and it is hard for machines to know this since the statement and minutes are anonymous,” said Julia Coronado, analyst and founder of research firm MacroPolicy Perspectives LLC.
Brett Gillespie runs a global macro fund at Ellerston Capital Ltd. in Sydney and believes that these kinds of tools are more helpful when it comes to short term trading practices. “They are useful very much in that initial window,” he says.
“It depends on your style of trading how much value you get. There’s still nothing at this stage that replaces reading the speech, or even better, watching the speech because people have their mannerisms.”