AI has driven the stock market into a hype-fueled frenzy, and an Israeli startup has even convinced regulators to let its chatbot hallucinate an investment portfolio on your behalf.
Developed by Tel Aviv-based Bridgewise, the chatbot is set to launch later this month in partnership with Israel Discount Bank after the startup received regulatory approval from the Israeli Securities Authority (ISA), Bloomberg reports.
Before you get too worried about an AI chatbot going rogue and cratering your retirement fund, it's worth noting that Bridgewise's chatbot won't make financial decisions on its own – at least, not yet. The AI chatbot is designed only to offer stock-picking advice.
Speaking during Calcalist's AI conference on Tuesday, Discount Bank EVP Asaf Pasternak explained the Stocktalk chatbot service will address growing demand among its customers for in-depth and on-demand financial analysis.
"One of the areas where customers need the most information to make decisions is investment management: two thirds of people trust an algorithm more than a human to manage their money, and 98 percent of our clients want a digital recommendation on their portfolio at least once a month," the banking exec was quoted as saying by Calcalist Tech.
The chatbot is reportedly built on three separate models – including a pair of language models used for data mining and interacting with the user, and a stock rating model responsible for decision making.
Together these models will apparently be capable of providing background information on specific firms, summarizing recent financial disclosures, and, of course, recommending stocks to buy or sell based on current market conditions. Whether those recommendations are any good remains to be seen.
Bridgewise reportedly plans to expand the offering to include annual forecasts, integrate earnings transcripts, and even put together entire investment portfolios based on users' preferences. However, at least for now, the chatbot's regulatory approval is subject to several conditions – including rules barring it from giving personalized advice, a company spokesperson told Bloomberg.
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While the Israeli government is cool with letting AI chatbots loose on financial markets, the US Securities and Exchange Commission head Gary Gensler isn't exactly thrilled about the potential chaos the models could cause.
As we reported late last year, Gensler issued a chilling warning: AI will end up crashing the stock market, it's only a matter of when. It's "nearly unavoidable," unless regulators take action now to limit the use of AI, he opined.
Much of Gensler's fear is rooted in the possibility that one too many investment groups could end up relying on the same model and dataset, resulting in a kind of herd mentality informing buying and selling decisions.
The SEC is said to be working to establish limits on the application of AI to financial markets, in a bid to prevent such a collapse. ®