Page 3 - FINAL CFA II SLIDES JUNE 2019 DAY 2
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LOS 6.a: Describe “fintech.” MODULE 6.1: FINTECH IN INVESTMENT MANAGEMENT
Developments in technology engineered by ‘fintech companies’’ applied in the financial services industry. Key areas include:
• Increasing functionality to handle ‘’big data’’, including Artificial Intelligence (AI);
• Automation of financial functions such as executing trades, providing investment advice and ‘cutting’ out of middleman!
LOS 6.b: Describe Big Data, Artificial Intelligence (AI), and Machine Learning (ML).
• Big Data -potentially useful (high volume, high velocity, and higher variety) information that is generated by our online
activities, including data from traditional and nontraditional sources.
• AI-computer systems programmable to simulate human cognition., e.g. neural networks.
• ML-programming that capacitates a computer system to improve task performance over time; helps to detect big data pattern!
LOS 6.c: Describe fintech applications to investment management.
• Text analytics refers to analyzing unstructured data in text or voice forms.
• Natural language processing is the use of computers and AI to interpret human language.
• Algorithmic trading refers to computerized securities trading based on predetermined rules.
• Robo-advisors are online platforms that provide automated investment advice based on a customer’s answers to survey
questions. (Advantage: low cost to customers. Disadvantage: the reasoning behind their recommendations might not be
apparent).
