Forget Gut Instincts, AI for Financial Decisions Is The Future, says Vijay Doradla, CBO, SparkCognition

Investors can use AI for financial decisions and make sure they’re investing in the right company.

Investing in new businesses is quite a risky task. Venture-backed startups fall flat 75% of the time, which provides financial investors with an opportunity to stop and think while thinking about investing in another business. To add some astonishment,  since 2013, the number of completed deals is just dropping, making it more significant than any other time for tech investors to make smarter investments. As investors are burdened with an ever-increasing number of companies to assess and more data, they should start leveraging AI for financial decisions and data science to help work on the decision-making process. In our recent interaction with Vijay Doradla, Chief Business Officer at SparkCognition, shared how AI is predicted to be involved in 75% of venture capital investment decisions by 2025.  

A Leading AI Company

SparkCognition is a leading artificial intelligence company, building AI platforms that enable the world’s most creative problem solvers to ignite lasting impact in their organizations and throughout the world. With deep expertise across critical industries, the company works with its clients to help solve the problems that matter most to them. Its products and solutions can be applied to a wide range of industries, focusing on: Fintech, Energy/Oil and Gas, Financial Services, Manufacturing/CPG, Aerospace, Cybersecurity, and more. Its main products are built entirely using AI and can stand independently or work together to create a cohesive solution. These products are the SparkPredict^®️ predictive analytics product, the Darwin^®️ automated model building product, the DeepArmor^®️ cybersecurity product, the DeepNLP^TM natural language processing product, and the Orca^TM fintech product.  

A Tech Enthusiast

Prior to joining SparkCognition as the Chief Business Officer, Vijay was on the VC side at Verizon Ventures investing in the company. When he learned about SparkCognition, its mission, its technology, and its people, he knew it was the kind of company that would play a major role in shaping the future of business. Vijay joined the SparkCognition team in September 2018 and started raising funds for its Series C round. The company completed the $100 million round in October 2019. Additionally, Vijay leads its business development and marketing teams, seeking new opportunities and helping shape how the company communicates its mission and capabilities. He also leads the financial services team that came onboard following the company’s acquisition of AIM².  

AI in Finance and Investment Banking

According to a recent survey by Deloitte Insights, 70 percent of all financial services firms are using machine learning to predict cash flow events, fine-tune credit scores and detect fraud. The next normal stage will undoubtedly impact financial market and investment decisions. Vijay believes that there exist vast amounts of latent data in banks that are not being used – data on valuable factors like client profitability and historical information on what worked and what didn’t. AI in finance can bring the latent data alive at appropriation, which offers a holistic view of a global department. He further adds that AI technology can be applied to a wide range of functions within financial services. As these applications are adopted, they become a trusted advisor to traders to offer insights that lead to quick results and improved performance. This is key, and as data science and artificial intelligence in finance will be used, it will be helpful for dynamic risk and portfolio management. Nonetheless, he says that the diversity and complexity of instruments are increasing (think cryptocurrencies, cross-asset swaps, equity and volatility derivatives, etc.). So, customers are looking for AI-based solutions to manage their portfolios in a fast and efficient manner. Additionally, the industry is moving faster and faster – the speed of information is impacting market conditions leading to local dislocations, so customers are looking for efficient, reliable, and self-adaptive solutions. SparkCognition recently announced the acquisition of AIM², a financial technology company. Through this acquisition, according to Vijay, SparkCognition has further expanded its AI capabilities into the financial services vertical, offering advanced AI technology that can uncover market pattern identifications and real-time client profiling, as well as automated market-making activities of various instruments in the financial markets, such as fixed income, credit, equity, etc.  

AI and Data Science in Investment Strategy

Artificial intelligence is being used for a vast range of applications in the context of investment strategies. According to Vijay, these applications are both coming from the sell and buy side, and include: arbitrage opportunities on illiquid assets, market patterns detection, local dislocations, portfolio management and optimal asset allocation, client profiling, compliance & audit trail, fraud detection (anti-money laundering, KYC), and reconciliation. He quotes an example – in the U.S. stock market and many other developed financial markets, about 70-80 percent of overall trading volume is generated through algorithmic trading.  

The Future of AI and Data Science in Finance and Investment Decisions

Going forward, Vijay believes that we will see the pervasive adoption of artificial intelligence in the financial services vertical. As organizations continue to recognize the value of reinforcement learning techniques and self-adaptive technologies to enable dynamic investing, he believes the  industry will see an exponential increase in adoption. For example, Mordor Intelligence finds that the global AI fintech market is predicted to reach $22.6B in 2025, achieving a Compound Annual Growth Rate (CAGR) of 23.37% between 2020 and 2025.