The world of capital markets is on the verge of a groundbreaking transformation. While technologies like blockchain, IoT, and cloud computing have all disrupted capital markets in the past, the potential change generative artificial intelligence (AI) represents is even greater. AI expert and entrepreneur Ahmed Reza is one of those leaders who believe that AI is about to bring a new era of efficiency, accountability, and sustainability to capital markets.
“While there has been much progress over the past two decades, the best is yet to come,” says Reza. “The rapidly growing potential of AI is set to revolutionize the way we invest, trade, and navigate the complexities of capital markets, truly bringing them to the 21st century.”
Self-described as an “AI geek”, Ahmed Reza is a Cornell graduate and serial entrepreneur who has quickly become one of the most well-known tech speakers, AI evangelists, and community builders in Florida. As Founder & CEO of Yobi, a startup using AI to develop synthetic agents, Reza has been at the forefront of exploring the transformative potential of AI in various industries.
Reza, who has delved deeper than most of his colleagues into the realm of AI, believes there are 5 areas in which capital markets and investors will benefit from AI the most: due diligence, transparency, accessibility, risk management, and regulatory compliance. Here is what Reza has to say about each of these:
Due Diligence: Unveiling Hidden Insights
“AI is extremely powerful when it comes to analyzing data to find patterns, anomalies, and make data-based predictions, doing so with an efficiency and accuracy that no human can match. This makes AI uniquely suited to find hidden insights that were once elusive, creating unique opportunities for investors by giving them a deeper understanding to make informed decisions.”
Transparency: Making Capital Markets Crystal Clear
“One of the biggest challenges that traditional capital markets face is the growing lack of transparency, which even the SEC has referred to. AI can help operators, regulators, and analysts identify signs of manipulation or fraud in real-time, ensuring that the market operates fairly. This could be taken one step further by having AI take action when such signs are found, with machine learning ensuring the system’s accuracy increases over time.”
Accessibility: Democratizing Capital Markets
“AI could be the great equalizer we have been waiting for, democratizing capital markets by breaking down technical barriers. I already mentioned how AI facilitates due diligence, which plays a role here. However, generative AI also means that users can get information in an easy-to-understand manner that adjusts to their expertise, interests, and particular needs. AI could basically become a financial advisor that speaks all languages, everyone can afford, and whose decision-making is completely based on facts.”
Risk Management: Safeguarding Investors
“The latest advancements in AI mean that these models can now gain immediate access to information through the internet, allowing them to keep up to date with recent developments. This is a game changer in terms of risk management, as it means that AI can monitor factors like public sentiment and real-time events to notify investors or take action if the risk becomes unacceptable, shielding them from unforeseen pitfalls.”
Regulatory Compliance: Navigating the Rulebook
“The capital markets are subject to intense scrutiny by regulators, especially at times of rapid innovation. With industries like crypto, blockchain, and fintech becoming increasingly relevant, regulations are being constantly adapted, making it harder for market operators and investors to remain compliant. AI can be the guiding compass that ensures adherence to this ever-evolving rulebook in an efficient, accurate, cost-effective, and safe manner.”