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March 2018	Citi GPS: Global Perspectives & Solutions

Use Cases in Capital Markets Banking

AI-driven software for traders/wealth managers is helping financial institutions aggregate enormous amounts of data, from company earnings to news flows, regulatory commentary, and industry trends – all in real time. AI-powered applications also have great use cases in compliance and risk management (see the interview overleaf with the founder and CEO of Behavox, a people analytics company).

AI in capital markets is also being explored for news sentiment and volatility analytics. Online trading platforms, such as E*Trade Financial, have rolled out new adaptive portfolios, which offer passive investment management that automatically rebalances to accommodate for market changes. Other players, such as Wealthfront and Betterment, also offer similar products.

We started this chapter with Kensho, founded in 2013, which offers an AI-driven repository of data, powered by strong visualization capabilities that facilitate making predictions on stocks, bonds, and commodities. For wealth managers and traders, this means less time spent on data gathering and more time on actionable trading and marketing opportunities.

Figure 22. Artificial Intelligence Use-Cases and Adoption in Markets Banking

		AI USE-CASES	MARKET EXAMPLES
	•	Virtual digital assistants for	 Fidelity, E*Trade
		assisted trading
	•	AI based analysis to enhance	 JP Morgan, Goldman
Customer		customer market insights	Sachs, Numerai, Walnut
Engagement	• ML-based high frequency /		Credit Suisse, Goldman
		automated trading platforms	 Sachs , DB, Citi
	• Automated trade ledger and market		 Goldman Sachs, JP Morgan
		reconciliations
	•	Asset price relationship tracking	 Goldman Sachs, RBS
Operations	•	News sentiment analytics for financial	 Deutsche Bank, JP Morgan
		forecasting
	• Enhancing research insights with AI		State Street
	• ML graph analytics techniques for		 Goldman Sachs, HSBC,
		market compliance & fraud analytics	JP Morgan, DB
Risk & Compliance	•	Developing credit risk profiles for	 UBS, Deutsche Bank
		wealth products

Source: Citi Digital Strategy Citi Research

TYPICAL VALUE BENEFITS

•AI insights helps improve ROI by 10-20%

•Automated trading reduced 8090% savings in FTEs

•RPA automation enables 60%+ reduction in trade reconciliation time

•Reduced info retrieval cycle by 50-60%

•Improved compliance by 70% and 5-10% better ROI for high risk profiles.

© 2018 Citigroup