As AI improves, BlackRock is replacing about 15% of its stock pickers with algorithms

As AI improves, BlackRock is replacing about 15% of its stock pickers with algorithms

The robots are coming for Wall Street’s jobs. BlackRock is replacing about 15% of its stock pickers with algorithms and mathematical models.

Some $30 billion in assets (about 11 percent of active equity funds) will be targeted, with $6 billion rebranded BlackRock Advantage funds. These funds focus on quantitative and other strategies that adopt a more rules-based approach to investing.

As part of the restructuring, seven of BlackRock’s 53 stock pickers are expected to step down from their funds. Several of the money managers will stay on as advisers. At least 36 employees connected to the funds are leaving the firm.

Adoption of AI in Finance

Most banks and credit unions are in the early stages of adopting AI technologies. According to a survey conducted by Narrative Science in conjunction with the National Business Research Institute, 32% of financial services executives surveyed confirmed using AI technologies such as predictive analytics, recommendation engines, voice recognition and response.

For those firms not adopting AI, challenges such as fear of failure, siloed data sets and regulatory compliance were cited. Based on the Narrative Science survey, 12% of the overall group weren’t using AI yet because they felt it was too new, untested or weren’t sure about the security.

A recent Accenture report noted that in 3 years, most banks will be doing more via AI as they interact with customers.

Artificial intelligence (AI) will become the primary way banks interact with their customers within the next three years, according to three quarters of bankers surveyed by consultancy Accenture in a new report.

Four in five bankers believe AI will “revolutionise” the way in which banks gather information as well as how they interact with their clients, said the Accenture Banking Technology Vision 2017 report, which surveyed more than 600 top bankers and also consulted tech industry experts and academics.

Beyond Finance

This trend goes beyond finance as Robots are already eliminating human jobs. New data from the National Bureau of Economic Research suggests for every one of them deployed in a manufacturing or industrial facility, the jobs of six people are eliminated.

New research released from the National Bureau of Economic Research yesterday shows that between 1990 and 2007, when one or more industrial robots were introduced into the workforce, it led to the elimination of 6.2 jobs within a local area where people commute for work.

The report, which was authored by economists Daron Acemoglu of MIT and Pascual Restrepo of Boston University, found that the wages of workers also declined slightly as a result of robots entering the U.S. economy. Wages dropped between 0.25 percent and 0.50 percent per 1,000 employees when one or more robots came into the picture.

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