Finally, Automation in the Art Market – Huffington Post

From driving your car to investing your pension, automation is becoming the status quo across industries. Last year, TechCrunch exclaimed that we were on the precipice of an automation revolution. Many economists term this transition the fourth industrial revolution, or industry 4.0, where automation and robotics perform professional tasks with more precision and efficiency. Skeptics fear machines ability to perform high-risk operations, like landing an aircraft. But when it comes to investing, robots are responsible for trillions of dollars. According to Business Insider, robo-advisors are expected to manage $8 trillion globally by 2020.

Robotic process automation or RPA is leading the frontier in FinTech innovations. A publication by Ernst & Young explains RPA can significantly enhance capabilities of finance in providing analysis and insights. For instance, it can substantially increase scope of data available to the organization. Cognitive RPA can extract and combine data from various sources. It can also provide initial analysis and conclusions. Automated investing strategies curve the risks of volatile markets in ways humans cannot. It didn't take industry leaders long to roll out their own automated services.Forbes reported that JP Morgan has devoted $600 million to the emerging FinTech solution.

On the surface, automated robo-advisors may seem identical, but a closer look reveals the unique fingerprints of each program. Wealthfronts robo advisor asks clients their preferred risk, then constructs a portfolio to fit those parameters. The underlying operations are created by finance professionals and while multiple companies offer similar robo advisors, they are each unique to their creators. Automated processes are most useful when there are clear parameters of input and output that are relevant to each other. In order to mitigate risk, automated investing processes must analyze pertinent dimensions of a market. Take the art market for instance.

Traditionally, investors use art advisors and instinct to speculate prices and determine opportunities. While this strategy can be successful, it operates on a narrow view of the market. Even the most experienced advisors are unable to detect the most growth opportunity, which is why many remain undiscovered. Further, art assets have a tendency to materialize in extreme competition. In his book The $12 Million Stuffed Shark, Don Thompson examines the auction that set records for a work by Damien Hirst. Thompson points to battling egos on the auction floor for the works high price.

The Physical Impossibility of Death In The Mind of Someone Livingby Damien Hirst (1991)

Applying robotic automation processes to the art market curbs the risk of pursuing unsupported acquisitions. At Arthena, computers execute analyses on nearly 40,000 data points from the art market to effectively assess an art works price and value. This process goes further to identify opportunities in the market that traditional techniques ignore. Applying our analysis to last years art market indicates that Arthena could have deployed up to $500M in capital, given our investment parameters (price, asset value) and our requirements for expected asset growth, volatility and liquidity.

Art world experts set the parameters for optimal investments and examine auction costs to complement the quantitative analytics. All an investor has to do is choose a fund. Automation in the art market introduces opportunities and maximizes value by determining real-time peaks and lows in the market.

RPA in art investing is yet another example of the power of automation. According to The National Direction of Corporate Directions, it is not uncommon for todays powerful RPA technology to reduce the number of humans needed on a data-intensive process from 50 people to five. For the the FinTech industry, automation allows innovative managers to focus their resources on crafting new products that expose unique asset classes. To learn how Arthena managers are doing just that in the art market, visit our How It Works page.

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Finally, Automation in the Art Market - Huffington Post