Automation in financial services and the ongoing re-imagination of work

From Technology outsmarts the human investor – FT

“It just gets harder and harder and harder,” reflected one money manager this week. His is the predicament of other professionals – anything done by a person that follows a pattern and can be coded into a form that a computer understands will soon get squeezed. Technology also has the advantage identified in 1970: algorithms stay constantly alert.

It does not imply the complete death – or automation – of the investment manager. A professional can still undertake original research on a company or a security that provides insight. As more of the market becomes automated, originality becomes rarer and more valuable: an idiosyncratic investor should achieve higher returns by standing out from the robotic crowd.

Nor can algorithmic efficiency be wholly divorced from human intelligence, as the Oregon study showed – the point was that humans needed to set parameters for computers to follow. Many asset managers use analysts and researchers to build investment models that then trade securities automatically; others blend their active risk-taking with passive elements.

But these difficulties demonstrate how automation eats into professions, not by taking away all the jobs in one day but by unbundling them – dividing them between tasks that only humans can perform and those of which an algorithm is quite capable. Then the boundary relentlessly shifts.

The last paragraph is key – there seems to be a growing consensus that automation doesn’t simply ‘destroy’ jobs, it makes particular aspects of or kinds of role redundant and the implementation and development of automated systems requires the remaining workers to fit around those systems in different ways. In many ways, then, automation is a company or institution-specifc organisational or administrative problem as well as a wider political economic problem.

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