Artificial Intelligence Finance in the 21st Century
Updated on Nov 02 2018
Artificial intelligence is changing the way we handle money. Several companies in the blockchain industry are directly joining together the world of artificial intelligence with the world of finance, and the results are profound to help improve security, money-management and more.
At the heart of the artificial intelligence (AI) revolution are machine learning algorithms, or software that self-improves as it is fed data. The financial industry can benefit from this trend immensely to help streamline banking, investing, receiving loans — not to mention, preventing financial crimes. AI is yet another technology helping to bridge-the-gap between people and finance.
How is Technology and Artificial Intelligence Influencing Finance?
Managing retirement wealth in the 21st century can be complex. The digital age is shifting the financial marketplace to leverage cloud, big data and mobile technology – which means it pays to be a digitally-enabled investor. On top of the complexity that computer automation is adding, the financial-services industry is constantly changing; which is why many investors are seeking guidance from expert financial advisors for money-saving and growing tips.
Artificial intelligence is the next big thing, according to experts at the Blockchain Summit in London. Here are some of the key ways artificial intelligence is changing today’s financial world.
As online shopping and transactions has risen in popularity, so has online fraud. A solution for online fraud has been challenging for retailers as declining transactions too aggressively to prevent fraud is resulting in loss.
In fact, according to a 2015 study by research firm Javelin Strategy, false declines, or legitimate transactions that are wrongly rejected, account for $118 bln in losses for retailers. Not only that, but a third of false decline cases result in lost customers.
Artificial intelligence can come in handy when dealing with fraud. By analyzing various data points, machine learning algorithms can detect fraudulent transactions that would go unnoticed by human analysts while improving the accuracy of real-time approvals and reducing false declines. Because of this, a number of companies are exploring AI-based fraud prevention to deal with the ongoing problem.
Chatbots provide a personalized and conversational experience to users in different domains. They have been powered by natural language processing (NGL) in past years, but AI is a natural transition for the technology.
There are several ways that AI chatbots can improve the banking industry:
- Helping users manage their money and savings.
- Improving banking self-service interfaces through voice or message chat and apps.
- Saving money in small increments through different channels by having access to your bank account and analyzing your income and spending habits to predict and manage savings.
On a basic level, AI everages analytics to assist in managing finance. The intelligence helps achieve a savings goal by making suggestions based on financial patterns.
Computers are good at crunching numbers and thanks to machine learning, they can now take on the subtleties and complexities involved in tasks such as trading stocks. A handful of hedge funds are exploring the concept, and have managed to obtain results that rival the intuition of human experts. That being said, there’s still a ways to go on this front.
While algorithms can provide invaluable insights and suggestions that can help the humans running the operations make better decisions, there are still many glitches.
Artificial Intelligence in Finance Is Constantly Evolving
Artificial intelligence as we know it today is still in infancy and has hurdles to overcome, including legal, ethical, economic and social challenges. However, the prospects for smarter trading, less damage and a more personalized experience are great.
Financial institutions and advisors are beginning to learn how to implement the intelligence into their practices as it evolves. The future of money mixed with intelligence just got more exciting as there’s no doubt many changes are coming.
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