$1.2 trillion brokerage TD Ameritrade is developing a Netflix-like recommendation engine in a bid to win investor attention

TD Ameritrade

Tim Hockey, TD Ameritrade's CEO

• TD Ameritrade, a brokerage with $1.2 trillion in assets under management, is building out a recommendation system similar to what Netflix has.
• By analyzing customers' trade data and portfolios, the system will make suggestions on news and educational content users should consume that's geared toward their trading strategies.
• TD Ameritrade hopes the system will increase engagement, therefore leading to more trading activity and obtaining a larger market share in a crowded field.

The next piece of financial news you read could soon come much in the same way you decide what show to binge on Netflix.

TD Ameritrade, one of the largest brokerages for Main Street, is building out a AI-based recommendation system similar to how Netflix suggests new shows that's aimed at helping customer's trade smarter.

Initially launched this year and dubbed the Content Intelligence Platform, the system currently makes recommendations on what type of educational content a customer should consume next based one what they've already shown interest in. Just like Netflix, clients can rate content they've read or watched to adjust the algorithms used to determine suggestions.

However, Vijay Sankaran, chief information officer at TD Ameritrade, which manages $1.2 trillion, told Business Insider that's just the beginning of what the system will be able to do. The Omaha-based brokerage is working on analyzing customer's trade data and portfolios to eventually offer suggestions on news that would be relevant to their investments.

"We want to use it in any way to help our investors get information more quickly," Sankaran said. "How do you really leverage the power of AI to ingest massive amounts of data quickly and then provide them with nuggets of insights based upon that."

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Recommendation systems stand to benefit both the customer and the company. In 2016, Netflix estimated its engine saved it more than $1 billion annually.

Sankaran said these types of suggestions increase engagement, which in turn leads to more trading activity, meaning additional revenue for the brokerage.

However, arguably more important is its ability to draw more of the customer's business to TD Ameritrade. Consumers have no lack of options when it comes to personal investing, thanks in large part to the rise of robo advisors in recent years.

Sankaran said a lot of TD Ameritrade's clients have accounts with multiple brokerages. The hope would be the recommendation engine would push customers to invest more with TD Ameritrade than other accounts, he added.

"More insights for our clients will make them more sticky to the platform," Sankaran said. "People will feel like, 'Ok, I can come to TD Ameritrade and get more insights than I have on a competitor of ours because we are really tailoring content to them."

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As a self-directed brokerage, TD Ameritrade isn't allowed to offer clients investment advice on specific stocks. However, Sankaran said his team plans to eventually build the engine out so it can point users towards similar investments already in their own portfolio.

"It takes a lot of time to find out, 'Ok, if I hold equity in this company, what else is like it?' Sankaran said. "We'll, over time, expand it so that we can say, here are 10 companies that are like this company."

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