The idea of robotics coming to life and automation developing intelligence has been around for centuries.
However, the term “artificial intelligence” (AI) was only coined 64 years ago at Dartmouth College in the United States. However, technology has advanced since the 1950s.
In fact, the speed at which technology has advanced is unprecedented and machine learning has followed in its footsteps.
There are many positive ways that artificial intelligence can impact the world of business and, more specifically, the finance industry. Although we may not recognize it, AI is used in many aspects of our day-to-day life.
For example, Google’s search prediction, weather forecasts, and e-mail spam filtering system are all subtle ways in which artificial intelligence is used.
This form of machine learning seems relatively simple. However, AI is now used for many purposes including matters of national security, business, and finance.
Who knows what the future of AI holds? The finance sector is already beginning to feel the transformative qualities of machine learning. Here are five ways in which artificial intelligence is revolutionizing the finance industry.
Fraud prevention
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Machine learning can be used to drudge through the heavy workload of preventing credit card fraud. This has been a great help in the banking and finance sector. This is because the probability of experiencing credit card fraud has increased with the popularity of eCommerce and online shopping.
These complex algorithms can quickly scan through data and detect any suspicious activity about the card holder’s behavior, location, and even spending habits.
If your client is typically based in Canada and they begin to show transactions in Cambodia, AI will identify this unusual behavior and trigger a security warning.
This tedious work could have taken a human, hours to complete or even gone by unnoticed. Now, thanks to machine learning, hundreds of financial criminals can be stopped before causing any more damage.
Voice shopping
In the past few years, there has been a boom in the market of automated speech recognition systems, also known as ASRs. This technology has introduced digital assistants into our everyday lives.
From Apple’s Siri to Amazon’s Alexa and Google’s Cortona, these digital assistants can conduct tasks. Also, they can hold conversations with an ample understanding of human nuances and speech. Now, these digital assistants have unlocked the ability to conduct ‘smart-ordering’.
This is possible as brands try to push speech recognition into the online shopping experience. However, this feature of machine learning has its limits. This voice-automated form of purchasing is relatively new and therefore limited to simple voice commands.
It will be difficult to see how a voice-automated interference can react to browsing through a product list and conducting more complex commands.
Investment and trade
Decisions regarding trade and financial investments can now be attributed to large amounts of data that have been aggregated by artificial intelligence. Automated software has the ability to monitor, track, and process data at an unequivocal speed.
Therefore, this fast decision-making process leads to faster transactions, and therefore, more time to make money. Not only are market predictions and portfolio analyses much more accurate, but there are now even digital platforms, known as Robo-advisors, that can offer individuals financial planning services with minimal human supervision.
This way you can invest your money automatically with no need to rebalance your assets. You can start with as little as $1 a day and let the Robo-advisor begin to invest. The best robo advisors provide you with profitable investments whilst you sit back and do little to no work whatsoever.
Managing personal finances
Another way that AI has revolutionized the finance industry is by providing insight into our spending habits and connecting these to financial management practices. These algorithms are designed to help customers make informed and wise decisions about their spending habits.
For example, the AI-based company, Wallet, helps you analyze millions of pieces of data and gives you advice on where you can save. It may tell you that, on average, you spend 25% more on Uber than on Taxis in the last month and that you saved $256 by using Uber.
Logging into your bank account and searching through your transactions is always daunting and we often avoid doing so. However, this is a central aspect of understanding how you manage your income, where you spend it, and how you can save money.
These apps can even send you suggestions, like coupons or discounts, for places you frequently go to. Machine learning helps these applications learn from their experience. Also, it improves their functionalities as they go along.
Chatbots and customer support
It’s frustrating it can be when you’re asked to be put on hold by the customer service team at your bank. These problems always seem to occur at the most inconvenient times.
Before you know it, you have been on hold for at least an hour, only for the connection to be interrupted. Now, artificial intelligence is used to recreate the functions of a customer service team.
Chatbots can mimic conversational banking experiences and help solve any issues the customer may have. For now, these are typically simple requests, however, in the future, they may be able to resolve more complex inquiries.
The advantages of this service are that financial institutions can significantly cut their costs whilst seemingly giving their customers access to a 24/7 customer support team. It also reduces the workload for staff, letting them deal with the most important inquiries.
The Future of AI
To say what the future holds for AI is uncertain is not an overstatement. However, we can predict that these machines will not only become smarter but faster and more agile in their cognitive abilities.
Digital assistants and automated customer service teams will develop more natural forms of processing language. Whilst all of the services mentioned above will be able to grow intellectually due to the large pool of experience they will have gathered over the years.
If one thing is certain, it’s that the future of the financial world will be inherently shaped by technological advancements in artificial intelligence.
