JPMorgan reveals institutional adoption of AI in trading

Institutional investors are increasingly recognizing the potential of artificial intelligence (AI) in shaping the future of trading, as revealed by a recent survey conducted by JPMorgan, a multinational investment bank. The survey, titled “e-Trading Edit: Insights from the Inside,” collected responses from 4,010 institutional traders across 65 countries.

JPMorgan survey unveils institutional view of AI in trading

According to JPMorgan’s findings, 61% of the respondents anticipate AI and machine learning (ML) to emerge as the most impactful technologies for trading within the next three years. This sentiment underscores the growing importance of AI-driven solutions in the financial sector, particularly in decision-making processes related to trading activities.

Following AI and ML, application programming interface (API) integration garnered 13% of the respondents’ preferences as one of the significant technologies shaping the future of trading. Blockchain or distributed ledger technology, along with quantum computing, accounted for 7% each, highlighting their potential but comparatively lower impact as perceived by the surveyed traders.

Meanwhile, mobile trading applications and natural language processing secured 6% of respondents, indicating their relevance but lesser prominence in comparison to AI and API integration. The survey also reveals a notable shift in institutional sentiment towards various technologies over the past few years. While AI and ML have been steadily gaining ground, other technologies like blockchain and mobile trading applications have experienced a decline in perceived importance.

Since 2022, blockchain and mobile trading applications have seen an 18% and 23% decrease, respectively, in investor choices as promising technologies for trading. This shift underscores the evolving landscape of technological preferences among institutional traders, with AI emerging as a clear frontrunner.

AI’s rise in prominence can be attributed to its diverse capabilities, including trade predictions and real-time threat identification to market sentiment. These features have positioned AI as a powerful tool for enhancing decision-making processes and optimizing trading strategies in dynamic and complex financial markets.

Shifting technological landscape and skepticism

Moreover, the integration of AI and ML has already demonstrated tangible benefits for investors. According to a 2022 report by Nvidia, 30% of respondents reported managing to reduce their annual revenue by more than 10% through the implementation of AI-driven solutions.

This underscores the tangible value that AI can deliver in driving efficiencies and improving performance within institutional trading operations. However, despite the growing enthusiasm for AI, institutional investors appear to be less inclined towards cryptocurrency trading.

According to the survey results, 78% of institutional traders have no plans to trade cryptocurrencies like Bitcoin (BTC) or digital coins within the next five years. This sentiment reflects a cautious approach towards the volatile and still-evolving cryptocurrency market, with concerns around regulatory uncertainty and market stability likely contributing to the apprehension among institutional investors.

Nevertheless, there is a slight uptick in the percentage of respondents engaging in cryptocurrency trading, with 9% indicating involvement in 2024 compared to 8% in 2023. This suggests a nuanced perspective within the institutional investor community, with a small but growing segment willing to explore opportunities within the cryptocurrency space despite the prevailing skepticism.

JPMorgan’s stance on cryptocurrency has been somewhat controversial, with CEO Jamie Dimon expressing skepticism towards digital assets like Bitcoin despite the company’s involvement in certain cryptocurrency-related initiatives. Despite this skepticism, JPMorgan’s survey findings provide valuable insights into the evolving attitudes and preferences of institutional investors towards emerging technologies and asset classes within the financial landscape.

The survey conducted by JPMorgan underscores the growing significance of artificial intelligence in shaping the future of trading, with institutional investors increasingly recognizing its potential to drive efficiencies and enhance decision-making processes. While other technologies like blockchain and mobile trading applications remain relevant, AI’s versatility and proven benefits position it as a key driver of innovation and competitiveness within the financial sector.