The role of artificial intelligence (AI) in trading is gaining increased confidence among institutional investors, according to JPMorgan’s latest survey, “e-Trading Edit: Insights from the Inside.” The survey, which covered 4,010 institutional traders across 65 countries, highlights a significant shift in perceptions about the most impactful technologies for trading in the next three years.
Key Findings:
- AI and Machine Learning (ML) Dominance: 61% of respondents anticipate AI and ML to emerge as the most impactful technologies for trading within the next three years, reflecting a growing consensus on the transformative potential of these technologies.
- API Integration Follows: Application programming interface (API) integration is the second most important technology, as indicated by 13% of respondents. This underscores the significance of seamless connectivity and integration in shaping the future of trading.
- Blockchain and Quantum Computing: Blockchain or distributed ledger technology and quantum computing each garnered 7% in terms of respondent preferences, reflecting a moderate but notable acknowledgment of their potential impact on trading.
- Declining Confidence in Other Technologies: Mobile trading applications and blockchain have seen a decline in investor confidence, losing 23% and 18%, respectively, since 2022. This suggests a shift in perception regarding the role of these technologies in the trading landscape.
AI’s Evolution in Trading:
AI and ML have seen a steady rise in importance over the past few years, with the technology accounting for only 25% in ranked importance two years ago. The survey emphasizes the growing recognition of AI’s role in trade predictions and real-time threat identification to market sentiment.
Cryptocurrency Trading Sentiment:
While institutions are increasingly bullish on AI, the survey indicates a more reserved approach to cryptocurrency trading. A significant 78% of institutional traders have no plans to trade cryptocurrencies like Bitcoin or digital coins within the next five years. This percentage has risen from 72% in 2023, showcasing a cautious stance toward crypto assets.
JPMorgan’s Controversial Stance on Crypto:
Despite the positive sentiment toward AI, JPMorgan’s approach to cryptocurrency has been marked by skepticism. CEO Jamie Dimon has been vocal in criticizing cryptocurrencies, even after the bank was named an authorized participant in a rapidly growing spot Bitcoin exchange-traded fund by BlackRock.
As institutions navigate the evolving landscape of trading technologies, AI’s prominence continues to grow, shaping strategies and fostering a new era of data-driven decision-making in financial markets.
