AI in finance is revolutionizing the traditional way of financial services and planning.
The financial services industry has always been behind leveraging advanced digital technologies. As financial institutions or banks deal with a tremendous amount of data, processing and deriving value from that require advanced solutions. Fortunately, the last decade has seen much development in technology landscape such as artificial intelligence, machine learning, big data analytics and more. Significantly, AI has already proven to be a powerful technology across all industries. In finance, it has the potential to positively impact entire the financial services industry, assisting organizations by delivering effective applications.
This technology revolution has also given the rise of fintech or neobanks. These are highly tech-savvy and delivering digital-only banking services. Undeniably, implementing AI in banking can have a significant impact on savings opportunities. The technology can also maximize resources, lessen potential risks and generate more revenue. Since almost every industry across the world heads up towards digital transformation, AI comes atop as a catalyst reinvigorating traditional banking systems.
Applications of AI typically offer scalability, automation, ease of use, risk management analysis and decision making to financial services providers that can foster a new banking experience tailored to each customer’s preferences.
Artificial Intelligence in Investment Management
AI is capable of predicting future events and shows some degree of autonomous learning. This can certainly change and advance both companies’ and individuals’ abilities in identifying patterns, setting up laws, creating effecting decisions, establishing communication with others and performing complex tasks, among others. When applied properly, the technology can dramatically change the way financial institutions perform. It will also enable them to deliver new kinds of value and rewrite operating models.
Adopting AI in investment management will empower firms to do things efficiently, augmenting the human workforce intelligence and facilitating the development of next-generation capabilities. It can also provide banks with opportunities to expand customer relationships, deliver better advice and minimize their costs. With AI, the financial industry can facilitate financial education to enhance financial planning capabilities and monitor customers’ journeys.
Already, major industry players in wealth management are capitalizing on AI to offer investment advice through their websites. Additionally, they use Robo-advisors to guide investing decisions. Banks can leverage advanced AI algorithms that can help them perform a better job in investing and managing portfolios in terms of tax efficiency, rebalancing, and creating other value-adds to improve performance and returns.
AI can also be used to improve the way financial services providers assess securities and make investment decisions, while improving core operational processes. According to PwC, to gain the benefits of AI, a firm should focus on four key areas: Creating a broad AI strategy; focusing on people; improving processes, and ensure that the company’s AI systems are well protected.