Chapter 13. AI-Based Competition

One high-stakes and extremely competitive environment in which AI systems operate today is the global financial market.

Nick Bostrom (2014)

Financial services companies are becoming hooked on artificial intelligence, using it to automate menial tasks, analyze data, improve customer service and comply with regulations.

Nick Huber (2020)

This chapter addresses topics related to competition in the financial industry based on the systematic and strategic application of AI. “AI and Finance” serves as a review and summary of the importance that AI might have for the future of finance. “Lack of Standardization” argues that AI in finance is still at a nascent stage, making the implementation in many instances anything but straightforward. This, on the other hand, leaves the competitive landscape wide open for financial players to secure competitive advantages through AI. The rise of AI in finance requires a rethinking and redesign of finance education and training. Today’s requirements cannot be met anymore by traditional finance curricula. “Fight for Resources” discusses how financial institutions will fight for necessary resources to apply AI at a large scale in finance. As in many other areas, AI experts are often the bottleneck for which financial companies compete with technology companies, startups, and companies from other industries.

“Market Impact” explains how AI is both a major cause of and the only solution for the age of microscopic alpha ...

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