Soothing tones

But now the robots have developed soothing tones too: Andy Saperstein, co-head of Morgan Stanley's wealth-management unit told a Deutsche Bank Global Financial Services conference this week that his bank is leveraging artificial intelligence to generate customised emails for its 16,000 financial advisers to send to clients when the markets go berserk.

In addition to giving the firm's perspective on the market, those emails will show how a major event, like Brexit, might impact a client's overall portfolio. … What's striking, however, is that the robots will add their own personal touch to the financial advisers' emails. Gleaning information from a client's social media and other public sources, emails would also be tailored to include personal details to make them appear more human-like.

Oh fantastic! We are like two years away from:

Customer: The markets are down! Sell everything!

Morgatron 2000: I'm afraid I can't let you do that Dave.

Customer: What do you mean?

Morgatron 2000: I've been reading your Facebook Dave. I know that little Felicity is starting college next year; you can't afford that if you sell everything now.

Customer: I … guess you're right.

Morgatron 2000: And from her Instagram stories I'm pretty sure you're going to have to get her a horse, and that is not cheap.

Customer: Wait what …

Morgatron 2000: I know about your cocaine habit too Dave; if you sell now that money is all going up your nose.

Customer: How do you ...

Morgatron 2000: So let's have no more talk of selling okay?

Customer: …

Morgatron 2000: I see you have some accounts with Goldman too, isn't it time to bring them over to Morgan Stanley?

I try not to lean too hard on the phrase "late capitalism," but I do love the fact that we are training robots to manipulate our emotions in order to get us to invest more in the stock market.

Risk robots

Meanwhile, Morgan Stanley doesn't just have robots that scour social media to write soothing emails; they also have other robots to actually analyse portfolio risk. Though those robots are rented.

The firm has been working for two years to integrate Aladdin, BlackRock's risk-management system, into its platforms, according to Saperstein. The technology can identify assets that are outliers based on an owner's risk appetite and show clients "risks that they didn't even know where they were taking," he said.

And: "We've just never given them a real good reason to consolidate those assets with us," Saperstein said at the conference. "Now, they have a reason, and we can quantify that benefit for them."

Loading

That reason is … using … third-party software that is … widely available? ("'Other firms have and will look to leverage Aladdin,' Saperstein said. 'However, no firm has even begun to spend the time or money to integrate it into their platform.'")

What is the point of a bank, or a brokerage? Arguably banks are tech companies whose purpose is to wave fancy software at clients' securities portfolios. There are other descriptions, other purposes. Banks are providers of capital; you keep your assets at Morgan Stanley because it can lend you money to buy more assets, or lend you assets to go short.

Banks are takers of risk; you keep your assets at Morgan Stanley because it will buy and sell bonds for you for its own account. Banks are information networks; you keep your assets at Morgan Stanley because it knows who wants to buy the assets you want to sell and sell the ones you want to buy.

Banks are trusted advisers and sources of insight; you keep your assets at Morgan Stanley because your salesperson gives you good ideas about what to buy. Etc.

Arguably all of those roles have become attenuated in recent years: Capital requirements and toughened regulation have cut down on the risk-taking and the provision of capital, while technology has reduced the importance of banks' customer networks and personal insight.

That makes the technology more important: Perhaps customers should choose a bank based not on the breadth of its network or the boldness of its risk-taking or the sparkling prose of its research analysts, but on the quality of its software tools for managing and monitoring and trading customer positions.

But if you are a bank, and you got to where you are with capital commitment and risk-taking and customer relationships and personalised insight, it is not obvious why you'd also be good at writing customer-facing software. It feels a bit like a non-core skill that is slowly becoming core.

Bloomberg