LONDON — UBS is trying to bring automation and artificial intelligence to the trading floor at its investment bank.
“I don’t think robotics or automating certain tasks is something new for this industry,” Beatriz Martín Jiménez, chief operating officer of the UBS’ investment bank and the UK region, told Business Insider this month, “but I think we’ve seen mainly automation in the back office.
“The question was posed a couple of years ago, could we implement these types of things in the front office? From using a robot where we automated a certain process, to applying artificial intelligence to trading decisions, to data science, and trying to data mine both structured and unstructured data in order to predict client behaviours and decisions — all these things.
“The belief has always been that the front office has less repetitive tasks than the back office. I think that is true. But that number is not zero.”
Business Insider visited UBS’ London offices recently to see a demo of a “robot” the bank has developed — a software programme that runs on a virtual desktop and automates a task involved with foreign exchange trade booking and allocation.
It’s not much to look at — a mouse moving around a desktop screen pulling numbers from a document and putting them into another system — but that’s the point. The programme is automating the boring admin investment bankers would rather not do.
Martín Jiménez says: “We really would like our front office people to be more effective and productive. These are all tools that belong to 2017 and beyond. We believe this is the way banks are going to be more than ever.”
Morgan Stanley has taken a similar approach to UBS, using machine learning-powered programmes to help its brokers with suggested trades, thus improving their efficiency. JPMorgan has also reportedly developed a machine learning tool for its equities business that helps find the best time to execute a block trade.
These are all tools that belong to 2017 and beyond. We believe this is the way banks are going to be more than ever.
“I think everybody is looking at this,” Martín Jiménez says.
UBS is looking at how cutting-edge technologies can be used for trading, as well as administrative tasks.
The bank has developed a machine-learning-powered investment strategy, which crunches through huge amounts of data before recommending the best investment strategy. The product was developed in partnership with New York fintech company Tradelegs, which UBS discovered through its Future of Finance Challenge.
Martín Jiménez says: “UBS has been very close to fintech and innovation. At the end of the day, as with any other bank your choices are: you partner up, you do it internally, which I think is difficult, or you invest, which we’ve done.”
So far, no client has chosen to use UBS’ new machine learning-powered product, but Martín Jiménez is confident that the first taker will come soon.
UBS has more fintech-powered products in the pipeline too. Martín Jiménez says: “We have a client management tool that is ingesting a lot of data on what clients are doing and how they are doing it, giving us a lot of clues on how to spend our time smarter with our clients. They give us information on what do they read and when do they read it.
“All these things, the power of digesting and analysing data is what we believe is the future and will help us be more productive in doing the jobs we do. The day is only so long and you need to make calls. If you can target those calls, in terms of not of who you call but also what you talk about, that is so much more powerful.”
So far the discussion has been about how these new tech tools can help investment bankers.
But talks of robotics and artificial intelligence often leads to speculation that jobs could be destroyed — even solidly middle-class ones such as investment banking, once thought of as unassailable by technology.
The World Economic Forum estimated last year that advances in technology could lead to the net loss of 5 million jobs worldwide by 2020.
Martín Jiménez says: “Are we going to be able to automate more processes? Yes. Will that mean headcount will go out? Maybe, but I think those people will probably recycle into something else.
“We serve clients. I don’t think clients are going to move into ‘I can talk to a machine.’ Human interaction is never going to go away in what we do, I don’t think, no matter whether you’re in the advisory business or in the markets business.”
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