Institutional Traders Highlight AI's Future Role in Trading, JPMorgan Survey Shows
Summary:
A JPMorgan survey reveals increasing institutional investor focus on the role of AI and machine learning in trading, with 61% predicting it to be the most influential technology in the next three years. However, institutional interest in blockchain and mobile trading applications has experienced a drop. The report also highlighted increased scepticism towards cryptocurrency, with 78% of traders having no plans to deal with it in the next five years.
A recent study by global finance giant JPMorgan shows a growing trend among institutional investors capitalising on the potential of artificial intelligence (AI) in the future of trading. Of the over 4,000 professional traders from 65 countries featured in the latest release of JPMorgan's “e-Trading Edit: Insights from the Inside” survey, 61% foresee AI and machine learning (ML) evolving into the most influential technologies for trading in the upcoming three years.
As per the survey's results, following AI and ML closely is the significance of application programming interface (API) integration, which stands as the next vital technology impacting trading's future for 13% respondents. With equal responses of 7% each, blockchain/distributed ledger technology and quantum computing appear as subsequent preferences of respondents. The last on the list are natural language processing and mobile trading applications, both having a 6% representation among respondents.
Over time, AI and machine learning have progressively advanced in significance in JPMorgan's “e-Trading Edit” report, moving from a mere 25% ranking in importance two years prior.
Conversely, institutions are displaying growing doubts about other technologies like mobile trading applications and blockchain, as noted in JPMorgan's latest survey. Blockchain and mobile trading applications, as potential technologies for trading, have experienced a drop in investor interest by 18% and 23% respectively since 2022.
AI has played a transformative role in reshaping the financial landscape in recent years by offering various utilities such as trade prediction and real-time threat identification. According to a 2022 Nvidia research, about 30% respondents noted a decline in their annual turnover of more than 10% by adopting AI and ML.
However, as institutions reaffirm their focus on AI's role in trading, they are increasingly hesitant about venturing into cryptocurrency trading. As per the survey data, 78% of institutional traders hold no plans to deal with cryptocurrencies like Bitcoin or digital coins over the next five years. This negative outlook towards crypto trading saw an uptick from last year when 72% respondents expressed their reluctance to trade such assets in 2023.
Despite the apparent back-off, those who have begun or continue to trade crypto has marginally risen from 8% in 2023 to 9% in 2023.
JPMorgan and its relationship with crypto have been subject to much debate over the years. JPMorgan's CEO, Jamie Dimon, persistently criticised cryptocurrencies like Bitcoin, even as the company earned recognition as a legitimate participant in one of BlackRock's rapidly emerging Bitcoin exchange-traded funds.
Published At
2/12/2024 1:10:53 PM
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