The term Artificial Intelligence came into existence in 1956, when John McCarthy, a renowned American computer scientist held a conference on this subject. For over 60 years, this concept has become an integral part of fast-paced, innovative, and demanding industries.
In order to get a competitive edge in an ever-changing market, some of the most successful and forward-thinking business owners and executive managers have been exploring the ways in which AI can be used. What we are now witnessing is a rise of Artificial Intelligence in all sectors of industry, including finance.
The business landscape is changing rapidly and the rise of AI is difficult to ignore, even in the more traditional and conservative areas. Here are some of the most notable ways in which Artificial Intelligence is taking over the world of finance:
Financial Robo-Advisors – Robo-advisors can also be spelled roboadvisors or robo-advisers and are algorithm-driven, automated digital platforms used for financial planning. These platforms that require little to no human supervision collect financial information from clients and use this data to make investments and offer advice.
The best robo-advisors of 2019 are extremely accessible, available 24/7 to all users with an Internet connection and require minimal resources. Some of the most popular automated financial advice platforms are: Wealthfront, Betterment, Personal Capital, Swell, and Ellevest and the minimum investment can range from 0 (Betterment and Ellevest) to $100,000 (Personal Capital).
You might be wondering what the biggest advantage of robo-advisors is. The answer is simple: while human financial advisors would never take clients with less than $100,000 in investable assets on, some robo-advisors, such as Betterment, require a minimum account of $0. According to a Market Watch press release, by 2015, more than 58% of Americans are expected to use a financial robo-advisor, and more than 40% of them say that this technology will have a substantial impact on the financial services market.
Artificial Intelligence and Credit Decisions – AI offers a more accurate, cheaper, and faster assessment of potential borrowers while also accounting for a large number of factors. Using AI to analyze all these aspects is extremely helpful as it leads to data-backed and better-informed credit decisions. AI credit scoring is based on rules that are more sophisticated and complex than the traditional ones and helps lenders differentiate between applicants that are credit-worthy and those that are not.
A notable benefit of using AI-powered systems in the credit market is the indisputable objectivity because unlike human beings, AI mechanisms are never biased. Loan-issuing applications and digital banking systems use AI and machine learning algorithms to evaluate borrowers’ loan eligibility by using alternative data.
Artificial Intelligence and Fraud Prevention – As machine learning is catching up with fraudsters and financial criminals, artificial intelligence solutions are proving to be very successful in financial fraud prevention. When it comes to preventing credit card fraud, artificial intelligence is especially effective and its use has grown exponentially over the last decade.
As online transactions and e-commerce platforms have seen a major increase, artificial intelligence solutions have become more and more effective. Nowadays, automated fraud detection systems can analyze clients’ location, buying habits, financial behavior and whenever something contradicts the assigned pattern, a security mechanism will be triggered.
Additionally, artificial intelligence is being employed by banks to prevent and reveal another egregious financial crime – money laundering. Artificial intelligence can be used to recognize any suspicious activity and to substantially reduce the costs and effort of investigating complex money-laundering schemes.
Artificial Intelligence and Trading – Over the last decade, data-driven financial investments have been steadily rising. Because it offers real benefits, this automated type of trading has been expanding rapidly across global stock markets.
Artificial intelligence trading systems can monitor unstructured data (TV News, Online News, Social Media, etc.) and structured data (spreadsheets, databases, etc.) in a fraction of the time it would normally take for humans to monitor and to analyze it. Algorithms can verify trading systems, analyze past data, and offer accurate predictions.
In a world in which the famous saying ‘time is money’ has never been more accurate, fast processing and fast transactions can be vital. Consequently, it is safe to say that artificial intelligence has become an essential part of modern trading.
The benefits of artificial intelligence in financial services are impossible to ignore. As of late 2018, more than a third of American companies have taken huge steps towards implementing automated systems into their company processes.
Although many business owners are still on the side of caution, fearing the challenges associated with implementing artificial intelligence technology, most of them understand the benefits. So it is finally safe to say that artificial intelligence is taking over the financial world and that is a good thing.
Shying away from technological progress is not the way and neither is avoiding machine learning and artificial intelligence, as this will only end up costing more in the long run. The best thing for us to do is to embrace the automated systems and learn how to integrate them and use them in our everyday lives.