According to media reports, JPMorgan Chase has launched a product called IndexGPT, which will rely on disruptive artificial intelligence (AI) to provide investment advice to clients.
A year ago, JPMorgan Chase applied for a product trademark for IndexGPT. According to the document, IndexGPT will utilize AI to analyze and select securities that are suitable for customer needs.
Last month, JPMorgan Chase CEO Damon stated that AI may be the biggest problem JPMorgan Chase is working to solve. Damon compared the potential impact of AI to steam engines and stated that this technology "can almost help all jobs.". And it stated that the bank has recruited thousands of AI experts and data scientists and started exploring the deployment of generative AI.
Now, the AI investment advisors that this market is concerned about have finally surfaced, but their effectiveness still needs to be tested by the market and investors.
It is reported that IndexGPT utilizes OpenAI's GPT-4 model to create a new series of themed investments in a basket of stocks for investors. Essentially, this is largely about creating so-called thematic indices in an automated manner, based on emerging trends such as cloud computing, esports, or cybersecurity, rather than identifying investment opportunities based on traditional industries or company fundamentals.
This marks Wall Street's latest attempt to seize this wave of AI trends, as AI has the ability to accelerate economic growth and potentially bring about a new era of investment.
However, at present, IndexGPT is far from a revolution in the financial industry. In this field, various technology companies and quantitative traders are already trying to use AI to control the market.
However, in a tightly regulated industry, finding fully validated application scenarios is a well-known challenge, and a single mistake can lead to millions of dollars in losses.
Gary Gensler, Chairman of the Securities and Exchange Commission (SEC), previously warned that Wall Street's investment in AI could trigger the next financial crisis. Gensler pointed out that the large-scale application of AI models is prone to the "herd effect", which can lead to financial collapse.
Wall Street strives to seize the AI trend
Rui Fernandes, head of market trading structure at JPMorgan Chase, recently stated that integrating AI into all of the company's index products is a long-term process, and IndexGPT is the first step.
He said in an interview, "This is to be able to choose more stocks, which may not be well-known to everyone. From stock volatility products to commodity momentum products, we are constantly looking for ways to improve all of our products."
Fernandes stated that the number of keywords generated by the GPT model is more than twice that of previous software, making it more representative of the topic. The index it helps create targets institutional clients who can establish exposure through products such as structured swaps or bills.
In fact, over the years, AI systems have been widely used on Wall Street, with banks investing billions of dollars to automate functions such as trading, risk management, fraud detection, and investment research. But the rapid rise of generative AI tools has prompted banks to compete in developing new products to take advantage of this opportunity.
Morgan Stanley launched an AI assistant based on the GPT-4 model last year to assist employees in collecting market information. Goldman Sachs is using generative AI to assist its developers in writing software code.