Creation of an In-House Artificial intelligence and Machine Learning Joint Venture

As artificial intelligence (AI) and machine learning (ML) began to disrupt industries around the world, it became obvious that investment managers would have to harness the power of these technologies or risk being left behind. It seemed that the options were to develop AI and ML capabilities in-house or wait for third-party solutions to be developed and then pay to play.

For AIMCo, one of Canada’s largest institutional investment managers, a third option presented itself, one that offered potential to benefit clients for years to come. In 2019, AIMCo partnered with Edmonton-based AltaML, a machine learning company, to establish a joint venture called AlphaLayer. Since creation, AlphaLayer has built AI and ML solutions to help AIMCo associates process trade matches, forecast changes in credit ratings, develop sentiment insights by way of natural language procession (NLP) and generate more accurate risk forecasts.

Integration of AI and ML allow investment teams to focus on higher-value work

“Pretty early on, we developed efficiencies by incorporating AI into some operational processes — and the value of that should not be underestimated,” said Dale MacMaster, AIMCo’s Chief Investment Officer. “But everyone was keen to see AI and machine learning boosting investment returns. I can say now with some confidence that we have a trading strategy that is using AI to process data and identify opportunities and it’s adding value to our clients’ portfolios.”

While AlphaLayer has provided short-term success, the strategy is inherently long term. Business leaders and investors universally agree that artificial intelligence and machine learning will transform businesses by reducing costs, managing risks, streamlining operations, accelerating growth and promoting innovation. Using and developing strong AI and ML capabilities allows team members to focus on higher-value work.

AlphaLayer’s AI and ML applications also provide revenue source

In AIMCo’s case, the organization has and will continue to benefit from AlphaLayer’s AI and ML solutions, but there is an additional upside. The joint venture is expected to make money, too. Commercializing AlphaLayer’s AI and ML applications will add an additional revenue source to the benefit of AIMCo clients, a premise that is expected to pay off for decades to come.

The future? Human-machine solutions

The AlphaLayer team has been focused on delivering AI solutions across all areas of the investment management industry from back to front office by building solutions that create operational efficiencies, generate innovations in risk management and create unique sources of investment returns. However, according to Chad Langager, AlphaLayer’s Managing Director, there is even more potential yet to be realized. “Human/AI integration within firms is not yet solved in any industry. This uncertainty will continue to cause ‘bumpiness’ as AI/ML is integrated and adopted more and more. There is every indication, however, that human-machine solutions will be far more powerful than either human or machine-based solutions. We feel that is the future and are excited about proving it out with AIMCo.”