Unless you’ve been hiding under a rock for two years, you’ll be well aware of the transformative potential of Artificial Intelligence (AI) across just about every industry. Since the launch of ChatGPT two years ago this month, AI is already permeating every industry and impacting daily life. While I may be biased, I believe that one of the most profound applications of this technology will be witnessed in investing. AI is already leveling the playing field for retail investors like never before. With AI computing capabilities continuing to improve exponentially and more of us becoming AI-savvy, I believe we’re about to see a monumental narrowing of the gap between professionals, institutions and retail investors.
Historically, professionals have had a significant edge over retail investors. They’ve had access to superior data, cutting-edge analytical tools and teams of experts to decode complex financial information, whilst retail investors have gone to great lengths to secure the same level of insight. AI is breaking down these barriers.
Large Language Models (LLMs) can now process and analyze vast amounts of data at incredible speeds, giving retail investors instant access to insights that were previously the domain of large financial institutions. In the near future, widely accessible LLMs will go a step further, becoming better than a team of expert analysts in detecting patterns and trends to support strategic investment decisions.
It’s not just analyzing company balance sheets and other high-level information where AI can be useful. Natural Language Processing tools – which can understand human language as it’s spoken and written – will help retail investors and traders with real-time decisions in response to moving markets. Already, there are tools which can analyze breaking financial news and social media reactions to gauge market sentiment and predict stock movements. Widespread adoption of these tools will help retail investors stay informed and make timely decisions, further leveling the information playing field.
AI still requires investors to ask the right questions, but this will change
However, with the technology as it stands today, investors still need to ask AI the right questions to extract valuable insights. Tools like OpenAI’s ChatGPT and BloombergGPT require users to frame their queries effectively. In the near future, AI will evolve to the point where it will proactively suggest the questions investors should be asking, making it even easier for those with limited knowledge to make informed decisions.
On a practical level, AI is moving towards streamlining the investing process for everyday investors, with certain tools already able to execute trades based on predefined criteria, manage portfolios, and even rebalance investments automatically. Retail investors can now employ sophisticated strategies without needing constant oversight.
Soon, the technology will also empower retail investors with highly personalized investment strategies. By analyzing individual financial goals, risk appetites and market conditions, AI tools will recommend tailored portfolios that optimize returns while minimizing risks. This level of customization was once the privilege of high-net-worth individuals but will soon be available to all investors. By considering an individual’s entire financial landscape – including spending habits, debts, and future goals – AI-powered personalization will make wealth management globally accessible, helping to tackle financial inequality.
AI is democratizing financial expertise
To grasp the full potential of AI’s transformative potential when it comes to retail investing, a useful comparison is the emergence of the internet. Just as the internet democratized access to information for investors, AI will enable them to harness all of the information in existence to democratize financial expertise.
There are dozens more use cases for AI in supporting investing, many of which are close to our hearts at eToro, from curating educational content tailored to individual investors’ needs, to enhancing the social aspect of trading by connecting investors with complementary strategies so that they can collectively improve their knowledge and investment skills.
We want our users to benefit from this cutting edge technology, which is why we’ve already integrated AI tools across almost every department of the business from customer service and marketing, to our smart portfolios and the development of new products. We will continue to enhance the eToro experience through AI and I have no doubt that eToro users will be enjoying a fully personalized experience in the not-too-distant future.
In the coming years, there is no question that the proliferation of AI will create new challenges for society. However its wealth-creating potential for retail investors is clear to see and in terms of leveling the playing field, we’ve seen nothing yet.
