A recent JPMorgan survey has highlighted some fascinating points regarding using Artificial Intelligence (AI) in trading. AI technology has been making significant inroads in having a substantial impact on shaping the future of trading.
The survey conducted by JP Morgan states that 61% of the 4010 institutional investors it surveyed believe that AI is having a significant impact on shaping up trading activities in the coming era.
JP Morgan is a multinational investment bank and financial services company headquartered in New York City, offering a range of banking and investment services to corporations, governments, and individuals worldwide. The bank has yearly net revenue of billions of dollars, so you know that the expertise they have set behind conducting this survey knows what they are saying.
The survey report was published in their most recent edition of e-Trading edit: Insights from the inside.
The survey highlighted that of the 4010 institutional investors it interviewed across 65 countries, 61% said that AI technology and Machine Learning (ML) would emerge as the most likely contenders to impact the trading market significantly.
They believe that in the next three years, things will be much different with AI technology compared to the current environment.
The following technology in line with Artificial Intelligence and Machine Learning that has been touted as a potential technology that significantly impacts trading activities is the Application Programming Interface (API). The survey pointed out that 13% of the respondents chose it as one of the most critical technologies they believe will mold the trading future.
An API, or Application Programming Interface, is a set of rules, protocols, and tools that allows different software applications to communicate and interact.
It defines how software components should interact, enabling developers to access the functionality or data of another application or service without needing to understand its internal workings.
APIs are fundamental for building software integrations, facilitating seamless interactions between disparate systems, and enabling the development of innovative applications.
In financial trading, APIs enable automated execution of trades, real-time market data access, and integration with various trading platforms.
Traders can utilize APIs to execute trades programmatically, implement algorithmic trading strategies, and access a wide range of financial data sources for analysis and decision-making, enhancing efficiency and speed in executing trades. Therefore, you can understand why traders rate this technology highly after AI and ML.
The rest of the technologies that the JPMorgan Survey highlighted
After APIs, the survey pointed out that blockchain technology and quantum computing are next on the list of technologies viewed as revolutionary in finance. These two technologies got 7% of the votes from the investors who were part of the survey.
Quantum computing taps into quantum mechanics to crunch numbers incredibly fast. It could revolutionize tasks like risk assessment and investment planning in finance by handling complex calculations much quicker than current computers.
6% of survey participants indicated that they preferred Mobile Trading Apps and Natural Language Processing. Natural Language Processing (NLP) involves the interaction between computers and humans through natural language, allowing machines to understand, interpret, and generate human language.
It enables tasks like text analysis, language translation, and sentiment analysis, facilitating more intuitive interactions between users and technology.
JPMorgan’s recent reports state that there has been a notable increase in the significance of AI and machine learning, marking a steady rise compared to two years ago when they only accounted for 25% of ranked importance in the company’s assessments.
While Artificial technology has been getting increasing approvals for its role in trading, other technologies have lost popularity among financial institutions.
According to JPMorgan’s survey, blockchain and mobile trading applications have lost 18% and 23% of investors’ preferred choices. The survey revealed that since 2022, these technologies have seen decreasing interest in being viewed as promising technologies for trading.
Over the past few years, AI has been transforming the finance sector as it has provided various institutions and investors with the capabilities to predict trades and detect immediate risks to market sentiment.
However, only some things work as smoothly as they sound with these technologies. Nivida issued a report 2022 revealing that of investors who have been increasingly incorporating AI and ML in their trading strategies, 30% reported experiencing a 10% decrease in their annual revenue.
While the survey highlighted the importance of AI’s role in the financial sector, it didn’t shed much of a positive light on crypto trading.
The JPMorgan survey revealed that 78% of institutional traders have pointed out that they have no plans to trade cryptocurrencies, including Bitcoin and other famous crypto tokens, and have yet even to consider jumping into crypto trading within the next five years.
The alarming fact about this percentage is that it had risen from the previous year’s survey of 2023, when it was revealed that 72% of institutional investors are unwilling to indulge in crypto trading.
Only some things are dark and gloomy for the crypto industry, as the percentage of those willing to start crypto trading or are already a part of this activity has also increased. However, the fact that the figures rose from 8% in 2023 to 9% in 2024 meant that this was a minimal increase.
JPMorgan’s stance on cryptocurrency has been controversial over the years. The CEO of JPMorgan, Jamie Dimon, has been a constant critic of cryptocurrencies like Bitcoin, even though the company is currently involved in BlackRock’s spot Bitcoin exchange-traded fund (ETF) project as an authorized participant.
The contrasting difference between the company taking part in one of the most prominent spot Bitcoin ETF projects and its CEO’s constant attacks on the same crypto creates controversy regarding why the company would leap into this project if its CEO is not on board with cryptocurrency adoption.
