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Role of AI & ML: How Technology has adavanced in broking industry

Broking involves buying and selling securities such as stocks, bonds, and other financial instruments on behalf of clients. As a stockbroker, we have been using and focusing on technological advancement and its adoption as it is playing an increasingly important role, particularly in the areas of infrastructure, data analysis, decision-making, risk management and much more.

What is interesting is the extent of Artificial Intelligence (AI) & Machine Learning (ML) which play specific roles in the broking industry.

AI can analyze vast amounts of financial data to identify trends and patterns in the market. This can help brokers make more informed investment decisions and provide better advice to their clients.

As we know, AI is emotionless and can be effectively used to automate the trading process, enabling brokers to execute trades more quickly and efficiently. This can help reduce the risk of human error and improve overall trading performance.

If we talk about risk management, AI can be used to identify potential risks and help brokers manage those risks more effectively. This can include analyzing market data, identifying potential threats to portfolios, and recommending risk mitigation strategies.

Even in customer service, AI can be used to improve customer service by providing personalized recommendations based on a clients’ investment profile and preferences.

This can help brokers build stronger relationships with their clients and provide more value-added services.AI&ML play a significant role in providing a customized experience to users of web and app platforms. By studying a user’s usage pattern and behavior, AI algorithms can provide tailored recommendations for news, research reports, investment products, and other content that matches their interests and preferences.

For example, a news app may use AI algorithms to analyze a user’s reading history, search history, and other data points to identify the topics and types of articles that they are most interested in.

The app can then use this information to recommend articles that are more likely to be of interest to the user, rather than showing them a generic selection of articles.

Similarly, an investment app may use AI to analyze a user’s investment portfolio, risk profile, and other factors to recommend personalized investment products and strategies that are better suited to their individual needs and goals.

Apart from cloud infrastructure, another key technology trend is brokers moving to cloud infrastructure has been on the rise in recent years.

This is because cloud infrastructure offers several advantages over traditional on-premises infrastructure, including:

Scalability: Cloud infrastructure allows brokers to easily scale their operations up or down based on demand. This means that they can quickly and easily add or remove resources as needed, without having to invest in expensive hardware.

Cost savings: Cloud infrastructure can be more cost-effective than on-premises infrastructure, especially for smaller brokers who may not have the resources to invest in their own data centers. Cloud providers typically offer pay-as-you-go pricing models, which means that brokers only pay for the resources they use.

Flexibility: Cloud infrastructure allows brokers to quickly spin up new environments and test new trading strategies without having to make significant investments in hardware or software.

Reliability: Cloud providers typically offer high levels of availability and reliability, with redundant systems and automatic failover capabilities.

Security: Cloud providers often have extensive security measures in place to protect against cyber threats and data breaches. This can be especially important for brokers, who deal with sensitive financial data.

The move to cloud infrastructure can help brokers reduce costs, increase flexibility and scalability, and improve security and reliability. However, it is important for brokers to carefully evaluate their cloud provider options and ensure that they are complying with any relevant regulations and industry standards.

Overall, technology advancement has the potential to revolutionize the broking industry by enabling brokers to make more informed decisions, execute trades more efficiently, and better manage risk.

As technology continues to evolve, we can expect to see even more advanced applications in this industry in the coming years.

(The author of the article is Padavala Anoop Naidu, Tech head – SAS Online)