Since the launch of the QuantMinds conference series 25 years ago, there have been plenty of shifts in the industry.
From the global financial crisis and subsequent collapse of banks and investment portfolios, through numerous economic downturns and crises, to the introduction of high frequency and algo trading and right up to modern day research into quantum computing and AI, quant finance has certainly not remained stationary. All this has led to plenty of speculation around what the next 25 years could have in store, and how quants can get ahead of the trends now. So, during the latest gathering of QuantMinds, we put three questions to our audience to see what trends are driving real quants working now.
What will have the biggest impact on quant finance over the next 25 years?
The QuantMinds crowd included a range of industry professionals, some with over 20 years of experience in the industry who led key discussions and others who have recently joined and will be instrumental in the transformation to come over the next two decades.
But what became clear from the first survey, was that Machine Learning has captured the attention of traditional and innovative quants alike. When asked what will have the biggest impact on quant finance over the next 25 years, over half of respondents voted for it, while only one quarter believe quantum computing will result in the biggest shake-up. Despite growing interest, only 15% thought breakthroughs in the big data and a mere 8% voted for blockchain as the technology with the potential for the biggest shake up.
It is perhaps the potential for disruption that Machine Learning promises that puts it so high on quants’ minds. While the idea of advanced, self-improving trading algorithms seems alluring, many quants may rightfully may wonder what role in the industry they will have if Machine Learning obviates many day-to-day responsibilities. Of course, polling the same quants on when Machine Learning would make the jobs of quants redundant, the likely time horizon could stretch anywhere from five to 15-plus years. In any case, advancements in Machine Learning will require not only some soul-searching for the quantitative finance industry, but also a lot of up-skilling.
Where will quants be working in 25 years?
With new technology often comes new opportunities, across industries and verticals, and it would surprise few for quants to move from the back-desks of banks. So, we then asked where quants expect to be working in 25 years?
Over half (53%) of quants thought they’d be working in Silicon Valley or within Tech firms, while 24% saw themselves remaining in banking. As many large tech firms like Google and Amazon look to finance to continue their global expansion, it’s not hard to image the skill-set and knowledge of quants being in high demand as these enterprises widen their scope.
Another 24% envision growth in asset management firms recruiting quants, and it certainly seems that quants are perpetually in demand at leading hedge funds. Some have commented on traditional institutional investors who are also now looking at quantitative finance as a way to differentiate themselves; as many find themselves pressed to justify higher fees than their index fund peers, scores have turned to activist investor techniques. Many expect institutional investors to rapidly develop quant capacity in another attempt to differentiate and offer value, adding to the competitive for quants looking to move.
On the flipside, not one respondent thought the insurance industry would attract the talent. It is perhaps a bit ironic then that many quants expecting to end up in tech firms may find themselves in roundabout insurance companies. Reports are coming through suggesting Amazon is eyeing up the insurance industry and with the recent changes to open banking, it could be easier for more tech companies to jump on this band-wagon.
What will be the biggest growth area in 2019?
Finally, lofty long-term thinking might be useful when planning strategic career moves and training areas, but what is fueling the discussion for quants in the near-term, the now? We wanted to know what quants see as the biggest growth area in 2019 would be.
AI took a convincing lead, with 44% of respondents voting. Other quants saw more traditional topics benefiting from a boom in growth over the next twelve months, including innovations in modelling (22%) and Algo/E-Trading (23%). Regulation scored just 11% of the vote.
Agree with the polls? Or think there are completely different trends and technologies driving the industry? Have your say with our QuantMinds poll: