Published on 08 July 2018


Commerzbank deploys AI for financial analysis

Commerzbank wants to deploy artificial intelligence to replace its financial analysts. It could effectively and inexpensively prepare analysis notes on company quarterly financial results. To do this, the German bank has chosen to adapt a software that is currently used to automatically generate reports on sporting events.

Commerzbank tests artificial intelligence to write basic analysis reports.

We know that artificial intelligence and robotics will end many jobs around the world. According to a McKinsey study, between 40 and 55 percent of jobs could be automated in the world's 46 largest economies. Manual jobs, on production lines for example, are very much in danger. However, in recent years, the most affected sectors include banking and finance.

In light of this information, the German Commerzbank has decided to go one step ahead. It is currently testing artificial intelligence to write "basic financial analysis notes", revealed the Financial Times. For this technology, the group has relied on the Berlin start-up Retresco, a specialist in automated content delivery.

This company became known due to its robot that is capable of writing news articles on sporting results. And it has been made clear: there is only one step between football and finance since it is the same software being adapted to the needs of the bank. Restresco was noticed two years ago, while investing in the company through a Fintech incubator.

75% of human work

In the Financial Times, Commerzbank's R&D Director, Michael Spitz, assured the feasibility of reports written by robots. "The financial analysis reports on quarterly results are all structured in the same way and source documents are often prepared in the same way," he said. This is the uniformity that facilitates the work of computerised algorithms.

In this context, the head of the bank believes that artificial intelligence is already advanced enough to conduct about 75% of the work of a human analyst to write an "immediate report on the quarterly publications (of a company)."  On the other hand, more abstract analyses cannot yet be done without humans, Spitz assured.

A cost-cutting measure

This research is motivated by the deployment of the European Markets Directive, MiDFID 2. Since January 2018, the directive requires that execution orders and research costs be separated. Previously, financial analysis was included in overall benefit. From now on, it is no longer free. But financial players have committed themselves to not putting the cost on their customers.

As a result, asset managers and brokers are embarking on a race to reduce the financial burden of this research activity. Since the beginning of the year, cost has already fallen by 30% on average, ensured the British daily newspaper. With the deployment of artificial intelligence, Commerzbank thinks it can go much further, but the experiment will take a few more years to complete.

Ludovic Dupin @LudovicDupin

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