Is the Fed Hawkish or Dovish? ChatGPT Will Tell You
The use of artificial intelligence (AI) has become increasingly popular in various industries, including the financial industry. ChatGPT, a text-based dialog system developed by OpenAI, has been used by many as a productivity tool for the advisory business. However, skeptics still question the usefulness and reliability of this system, especially in Switzerland.
Two Scientific Studies
Two scientific studies were conducted to test the ChatGPT system's capabilities in classifying Fed texts and corporate news accurately. In the study "Can ChatGPT Decipher Fedspeak?", the aim was to evaluate whether the Fed's statements were more dovish or hawkish on monetary policy. The study concluded that ChatGPT beat Google's widely used "BERT" dictionary-based classification system. Another study conducted by University of Florida researchers focused on interpreting headlines and news about companies. The aim was to determine whether these news items influenced the share price. The results indicated a statistical correlation with subsequent stock movements, showing how ChatGPT was able to correctly analyze the impact of the news.
Skepticism in Switzerland
The skepticism among independent asset managers about ChatGPT is high in Switzerland. According to a survey, more than half think text generated by ware based on AI is overrated. Accordingly, there is a certain reluctance to invest in corresponding AI companies. However, customer advisors at banks are increasingly concerned about whether their profession will still exist in ten or twenty years because of artificial intelligence.
Trusting the Tech
Despite the reservations, chatbot technology is becoming increasingly important for internationally active Swiss banks, especially those active in the Angloxon region and Asia. This is because financial institutions in these areas use banking chatbots much more frequently. Finally, chatbots will only be used if they are useful and productive, and the tech can be trusted.
As a conclusion, it appears that ChatGPT has the potential to be an important tool in the financial industry. Its success in analyzing Fed texts and corporate news show its capabilities, but there is still a long way to go to fully trust this technology.
