Investment “quants” ushered in a decade of disruption to the approach to market behavior assessment. This seismic shift in investment management was the focus of the bestselling book: “The Quants” by Scott Patterson. If the top users of quants support are correct, we will continue experience further disruption. This time deeper and faster. In fact, the escalation of quantitative techniques in finance is likely following an exponential growth curve similar to other technologically disruptive trends as famously predicted by Ray Kurzweil in his bestselling book: “The Singularity is Near.” Kurzweil notes that most observers incorrectly extrapolate trends linearly, and as a result fail to appreciate the urgency and the threat brought about by the inherent acceleration of exponential processes. As the pace of quantitative innovation in finance gains speed, those who fail to adopt such techniques will become uncompetitive and will perish.
Investment professionals are coming to the realization that “old generation” decision tools are incomplete or broken. We need to stop thinking of quantitative tools and an extension of traditional, fundamentally-based investment approaches, and embrace the fertile greenfields and new insights now accessible using new techniques such as machine learning and artificial intelligence. We must actively seek out systems that allow for multi-asset evaluations, embedded order and hierarchization. In a recent survey published by Bloomberg in January 2020, many of the top investment quants agreed that the quantitative techniques are here to stay. Machine learning produces faster decision making and the growing need for faster data crunching are the next decade’s trends.
As stated by the forward-thinking Duke University finance professor Campbell Harvey in his recent article: “The pace of technological change and advance in machine learning and quantitative methods will result in a ‘shake out’ in investment management.” It is not surprising that Campbell chose to title his article: “The future is quant.”
Scientific Financial Systems has stood up to the challenge of producing an innovative response to address the need for “technological survival tools” for the investment community. SFS recently launched its second version of Quotient, an easy-to-use, interactive and fast-responding tool that fosters creativity while offering support for a wide range of data architectures. It may very well be the first such support tool built for analysts who will not have to become technology experts and yet still be able to improve their strategic and competitive response to clients.
Pete Millington, Scientific Financial’s CEO, informed that the company is working diligently on their following positive disruptive business model. As Mr. Millington stated: “Quants urgently need better and more flexible tools to compete in the new information-driven era.” SFS’s Quotient product is here, and it can help your firm to stay ahead of the curve to embrace the innovation and creativity required to be an industry leader in this new world.