AI allows us to make informed decisions and focus on the right things

For over two years, SEB has been using AI to analyse the foreign exchange market. “AI helps us focus and allows us to be more proactive when it comes to identifying problems and opportunities at an early stage,” says Simon Österberg, Chief Quantitative Trader in FX at SEB.

In the fast-paced world of foreign exchange (FX) trading, making informed decisions is crucial for success. The integration of artificial intelligence (AI) has revolutionised the landscape of financial markets, providing traders with powerful tools to analyse data, identify patterns, and ultimately have more effective decision-making processes.

“Today we have access to several hundred million updates every day. This surge in data availability translates to substantial benefits for customers, since AI systems can process and analyse vast amounts of information,” Österberg says.

“Our AI tools allow us to highlight focal points for us. Like identifying customers that have a need – to quickly grasp where we have a potential problem or opportunity – and where it seems to be flowing well. All in all, it’s an aid that allows us to focus on the right things.”

Besides being able to go through huge amounts of data, AI also makes it easier to make decisions based on hardcore facts.

“The data we’re dealing with today is no longer impacted by personal opinions. Instead, we have access to data that is indisputably “true” and reflects actual occurrences in the market and customer behaviour.

A manual trader, while trying to accomplish very much the same thing, will be biased – whether he or she knows it or not.”

According to Österberg, it is not only the foreign exchange market that has changed, but also the relationship with the customers.

“20 years ago, it would quite likely be the bank’s salesperson who contacted for example the customer’s Head of Treasury, and then they had a discussion. Today, it may instead be a developer or quantitative analyst from us who talks to the customer’s quantitative analyst. As the markets and SEB have become more digitalised, so have the customers. They too have started to automate and evaluate their actions on a quantitative basis.”
Another change to the FX landscape is the view on information. While it earlier was something you took for granted it is today considered a valuable commodity.

“The information we receive can in some situations be expensive, as marketplaces and other banks understand how valuable it truly is.

But the information also allows us to offer a better service – a better product at a better price. And when we can offer a better price, we get more business, which in turn gives us even more information, and which allows us to offer an even better price. It creates a virtuous spiral.”

So where does AI come in?

“In order to be able to set a competitive price for buying and selling, we must be able to hedge the risk effectively, and AI can help us gain insights from historical data from exchanges and clients by understanding what our impact is.

Since we’re a big player in the market, especially regarding Scandinavian currencies, our deals – when we hedge and when we trade – could potentially have a large impact on the market. We make an imprint, which means that we ourselves influence the system in which we operate. AI can help us a lot in identifying our influence and make us understand how we affect the financial system with our actions.”

The new AI tools help Österberg and his team to be more proactive when it comes to identifying problems and opportunities at an early stage.

“Our tools also help us spot customers with a need. We know what the most common traps are and can therefore advise our clients as we identify what they are doing and what they are trying to achieve. By leveraging AI we can filter through the noise and focus on the things that bring value, both for us and our customers.”