From simple ones to complex management systems, the evolution of technology has made every task seem easy-to-do and straightforward. Consistently, humans and businesses have maximized the use of technology in their day-to-day lives and operations.
Nowadays, many people, companies, and institutions own devices and systems that boost productivity and creativity. There are also technological improvements that aim to improve one’s lifestyle, enhance communication, and increase sales.
With so much data to process and handle, most industries are investing in these advancements; one of them is the financial industry. Financial institutions have embraced the advantages brought by technology, and one of those is the use of financial AI. Read on to learn more.
What Is Financial AI?
Artificial intelligence in finance is changing the manner we deal with money. AI helps the financial industry streamline and optimize processes ranging from risk assessment, fraud detection management, financial advisory services, trading, and managing finance.
In terms of data patterns identification, AI is more efficient than humans, making it advantageous to finance industries to understand their target audience and obtain insight.
Learning its two primary types is vital in understanding the existence and purposes of AI in the finance industry.
Weak AI
Also regarded as Narrow AI, this type is only set up to fulfill or accomplish a predetermined set of tasks or functions. Its purpose is specific, so Weak AI works under the rules set and bound by it.
It does an excellent job in focusing and doing small tasks. However, it cannot go beyond the rules set. Most robots with Weak AI are restricted from engaging in conversations they are designed to correctly respond to, such as Siri and Alexa.
Strong AI
Strong AI, also referred to as Full AI, has a broader scope and bigger capabilities than Weak AI. Its functionality and intelligence are extensive and varied enough that it can mimic the human brain.
Its power to perform actions can be compared to that of actual humans. Moreover, it can understand and gain consciousness.
Due to its strength, it is challenging to define and set intelligence accurately, resulting in difficulty in setting boundaries for what it can do. Most prefer Weak AI over Strong AI because of its nature to focus on specified tasks.
What Are the Purposes of Financial AI?
With the emergence of cognitive computing, Chatbots, Personal Assistant, and Machine Learning, it is evident that the finance industry has benefited the most with the rise of AI.
For years, most financial organizations have been investing and are considering incorporating AI in financial transactions. There are many ways AI has reshaped and improved the financial industry.
Assessing Risk and Fraud
AI in finance is a game-changer for risk assessment. It provides bank and credit unions the tools and solutions for the identification of potential risks and fraud.
Its data-driven and data-dependent nature help a lot in dealing with credit-challenged customers. Through machine learning technology, it can access tremendous consumer data to determine their behavior and needs.
Providing Financial Advice
Taking into account a customer’s overall financial position, complete financial history, demographics, and detailed financial habits, AI could deliver profound financial advice.
Moreover, even information that isn’t available yet can be obtained and recorded for future transactions. A chatbot can ask questions to know further about an individual’s goals.
Trading
The existence of AI Robo-advisors is shaping the future of stock trading. It can analyze millions of data points and execute trades at the optimal price.
It can make predictions and forecasts on markets based on observed patterns in past events and data with high accuracy. Some companies develop unique AI-based algorithms for trading currencies and giving recommendations on the most profitable investments.
Managing Finance
To look at a person’s overall financial well-being, AI can be used to examine cash, credit, and investment accounts. It will help in keeping up with real-time changes to create personalized advice based on incoming data.
AI is beneficial from micro to macro investments because it saves time from making lengthy spreadsheets or manual recording or computing. The rise of this finance technology also aids in helping consumers make smart decisions like Wallet’s goal.
Conclusion
From analyzing data points, finding patterns and trends, and predicting future patterns, AI has become a real deal in the world of finance. It has revolutionized the financial industry by changing how we access, analyze, and understand data and information.
