Role of Artificial Intelligence in Future Finance
Nowadays, AI is the largest growing technology in every sector of life. AI has a transformative impact on the modern economy and revolutionized the financial services industry. In finance sector, AI is used rapidly that automates repetitive tasks, improves the work efficiency and augment the human decision making. Artificial Intelligence in finance is transforming the way of interacting with the money. AI is helping the financial industry to optimize the processes from credit decisions to quantitative trading and financial risk management. Almost every company in the financial technology sector has already started using AI to save time, reduce costs and add value in their products.
Finance Industry adopting AI
89% of European banks have started working with Artificial Intelligence. Finance professionals strongly believe that AI can be used to manage and control the finance in better way. We already see that finance professionals believe in AI’s capabilities in their domain.
Risk Assessment and Fraud Detection
An important domain of finance industry is “Risk Management”, almost 40% of AI deployment in finance is managing the risk. In risk management, the processing of large amount of data is handled in short time through AI. A task in financial sector that would take too much time for human to do, but AI and their algorithms analyze the history of risk cases and identify early signs of potential future issues much faster than human mind.
Artificial Intelligence has been very successful to detect financial fraud and the future is looking brighter every year, as machine learning* is catching up with criminals. *Machine learning is the technique of data science that provides big data to machines.
AI is especially effective to preventing credit card fraud, which has been growing in recent years due to high volume of e-commerce and online transactions. Fraud detection system will analyze the client behavior location and buying habits and triggers a security mechanism, when something seems out of order and contradicts the established spending pattern.
Artificial Intelligence has minimized fraud and malicious activities in finance sector through biometric, as AI provides recognition solutions, such as face, voice and fingerprints recognition. AI has very quick access to this data than any other technology and ensures good security. Banks are rapidly adopting AI biometric techniques to prevent fraud.
Financial Advisory Service
In financial advisory services, in order to reduce the rates of commission on individual investments, machine learning can do calculations quickly and charge no commission; AI calculates dozen of payments in microsecond that humans cannot work for a single down payment. AI is advancing at its rapid pace in financial advisory sector, but there is still wide gap, where machines can truly understand human sentiments to provide financial advice at the level of current human advisors, we might get solution of this in future through Artificial Super Intelligence (ASI) that we discussed in our previous blog.
AI has also improved the customer services in finance industry, especially in Banking and Insurance sector through AI Chatbots.
Investment companies have been relying on computer and data scientists to determine the future pattern in trading. Data-driven investments have been rising steadily over the last 5 years. It is also called high frequency trading. This kind of trading has been expanded rapidly across the world’s stock market. AI offers multiple significant benefits in trading, as it finds out the pattern very quickly than human mind. For example, Intelligent trading systems monitor both structured (database, spreadsheets etc.) and unstructured (social media, news, etc.) data in a limit of the time, it would take much time for the people to process it. As we know ‘’time is money’’ truer in trading. Faster processing means faster decisions, which means faster transactions that is possible through adopting AI.
We can see AI is also helping us to manage our personal finance. Personal financial management is one of the recent developments on the AI-based wallet. Wallet started by a San Francisco based setup uses to build algorithms to help the consumers to make smart decisions about their money, where to spend it. AI accumulates all the data from their web footprint and create their spending graph. That’s why it helps to save time from making lengthy spreadsheets or writing on a piece.
In nutshell, based on these facts, it is time to embrace the AI revolution in finance sector. We need to understand the importance of Artificial Intelligence from the technology to the role of people in balanced and structured way.