With the increased adoption of digital technologies, artificial intelligence is revolutionizing the way organizations make decisions and automate tasks. 

Global evolution of the technology has pushed financial consultants and businesses around the world to adopt AI to promote innovation-driven business growth. Leveraging technologies such as AI, natural language processing, and machine learning is beginning to shift finance industry dynamics.

AI has also been transforming corporate finance management to provide new opportunities and to benefit bankers, investors and entrepreneurs in many ways. Considering the importance of AI, the prerequisite for using it in the finance industry lies in maintaining a healthy balance between human-made and machine-made decisions. 

What is AI? 

AI includes the use of machines to perform human actions such as problem-solving and decision-making. It is primarily based on the use of algorithms for decision-making by analyzing real-time data. The algorithms perform instant analysis by combining the information available from different sources. There has been a significant improvement in analytical techniques, storage systems and processing speeds. 

One of the examples of such instant analysis includes the introduction of automated stock trading for the optimization of stock portfolios. Market analysis and investment decisions are made by financial algorithms based on collecting information about market transactions. 

"Before we were limited to human response time, which is about half of a second or about the blink of an eye. Now when you think about trading, things are happening in nanoseconds or certainly milliseconds," says Brad Bailey, research director at Celent. 

Applications in Finance 

AI is transforming businesses in the financial services industry by helping them embrace improved communication and customer services. 

Risk assessment. AI is built using the algorithms of machine learning. Financial activities such as keeping a record of credit cards, active loans and loan repayment habits of an individual require machine processing. Similarly, machine algorithms are designed to analyze thousands of financial records in seconds and identify otherwise undetectable errors or inconsistencies. In many areas of finance, automation has been established using AI to run intelligent data analysis and communicate with customers with the help of chatbots.

Financial advisory. Technological approaches such as robotic process automation and AI are playing an important role to solve the problems of financial firms. Increased competition among financial institutions has significantly reduced the commission on an individual investment.. 

Undoubtedly, the collaborative effort of machine computing and human insight results in more productive outcomes. AI can serve as a proactive financial advisor in making strategic business decisions. 

Trading. Banks and investment companies are adopting advanced technologies and investing more in innovation to remain competitive. AI algorithms are good at predicting the right amount to be invested for a maximum return on the investment. Buying and selling prices of the stocks can be estimated or predicted to avoid loss, with 24/7 financial insight into real-time trends.

Customer service. The demand for prompt and personalized services is increasing across all industrial segments, including finance. Leveraging technologies for this purpose requires understanding big data analytics to give customers a personalized experience. This requires designing and developing specialized software based on the needs of the banking institution.

Consumer finance. Software that ensures safe and secure online payment can be one of the biggest and positive changes in the financial industry, as cyberattacks and online fraud are among the major concerns faced by customers these days. Loss due to online fraud is expected to increase to $48 billion per year in the next two years. AI’s ability to analyze information and detect anomalies or errors can help in developing a secure online payment system. 

A rapid and progressive change introduced by AI in the business operations of financial institutions is set to improve the customer experience. Also, such investments help financial companies to expand their market share and remain competitive. 

Henry Bell is head of product at Vendorland.