This Firm Is Using AI and Blockchain To Transform Wealth Management

May 30, 2018 at 08:13 // News
Guest Author
AI and blockchain

Today we speak with Alexey Shirobokov, CEO of AITrading, an AI-powered platform that levels the playing field between professional wealth managers and retail investors. Alexey has spent the past 13 years working in finance and corporate planning. Today, he will tell us more about his upcoming project.

What was the specific void or opportunity you spotted that inspired the idea behind AITrading?

At first glance, it appears that the trading industry has expanded well beyond conventional financial services and now seems to have successfully adopted the latest fintech innovations. However, today, its tech haul is concentrated primarily among the world's richest hedge funds and banks, which have invested heavily in the equipment, technology, and human resources in recent years to establish a cutting-edge in-house infrastructure, big data analytics, AI-powered systems, and more.

In turn, in the retail trading sector, the situation is entirely different. Here, most of the software is over 20 years old, completely unupgradable, and extremely difficult to use in day-to-day trading. I know dozens and dozens of people who manage multi-million dollar portfolios by spending inordinate amounts of time writing code to evaluate trading ideas and strategies. Consequently, many amateur traders choose to hold on to their day jobs, not having the time and often lacking the background or interest to code up their entire trading strategies.

This is precisely where AITrading comes into play. With an aim to level the field for amateur, recreational, and professional traders — who do not have access to the enterprise-grade capabilities of the largest hedge funds, banks, and corporations — we are working towards a user-friendly, efficient, and appropriately priced solution. Namely, the AI is a service model for all types of traders and wealth managers.

What have been some of the biggest blind spots in the space?

Take the banking industry, for example. In fact, it has undergone a digital transformation by focusing on the customer experience and moving from paper-based systems to smartphones. Now, the same fate likely awaits the wealth-management industry, because people don't want to spend their days in front of computer screens flickering with charts and graphs if that means not getting their actual work done or writing one-off code that only satisfies their immediate needs.

Today, information, analytics, decision-making, and infrastructure are the four pillars of the wealth-management industry. Unfortunately, for retail investors, these are uncharted waters, and the fourth pillar of IT infrastructure is a real pain for them. With the AITrading platform, we will deal with these fundamentals and open the $55 trillion wealth-management market to more mainstream investors around the globe.

Tell us more about AI-powered robo-advisors and their machine learning capabilities. How should retail investors be thinking about this technology?

The first robo-advisors were introduced in 2008, right after the global financial crisis. Initially, investors were skeptical about the technology — which generally had predefined business logic — and its uptake was relatively slow. Moreover, some firms marketed it as an AI technology, while, in fact, it was nowhere near a stage of actual implementation. Since then, things have improved, however, and now machine learning and AI-based systems have become much more commonplace in the world of consumer technology. The crucial point, though, is that best-performing systems are those with access to big data and behavioral insights gleaned from all sources of customer feedback. In the retail trading sector, this approach is entirely new, and we are always busy implementing it into the AITrading platform.

Describe your business model and what are the core components that drive the AITrading platform?

Mainly, we have two primary revenue streams: the subscription fee from our retail customers and the businesses paid access to our marketplace. On the one hand, the AITrading platform will be open to all and will provide its core functions free of charge. By design, the platform connects to brokers and exchanges to gather trading data, process market signals, recognize trading patterns, and offer actionable trading ideas and strategies — which will be available on the AITrading marketplace — to its users via a straightforward interface. This solution will free up valuable time and resources, allowing retail investors to improve their wealth management experience and maximize returns as if they are using hedge-fund-grade risk management technology or enterprise-grade software and analytics tools.

How do you see your firm evolving in the next 3 to 5 years, and what impact do you hope to make in the industry?

Today, the wealth management sector is ripe for disruption. According to EY, it is worth over $55 trillion and will reach close to $70 trillion in three years. Given this trend, we are ambitious, but we are also reasonable! We had validation from our customer interviews and are working toward reaching 1,000,000 users by 2022.

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