AI IN BANKING

No one could have predicted how advanced artificial intelligence would become more than 70
years later when Alan Turing questioned if machines could think. Simple concepts like machine
learning (ML), robots, deep learning, expert systems, neural networks, and much of what we
today refer to as artificial intelligence were all born from this one query (AI).

Over time, AI has penetrated every industry, upending convention and the existing quo. Below
are some of the ways AI in finance is reinventing the banking and finance sector, which has not
been left out.

As AI becomes more prevalent in the finance industry, it has a variety of effects, both positive
and negative.

Intone Networks asserts that AI has improved the banking and financial services sector by:

 Minimizing operational costs

 Improving customer support
 Improving risk management
 Automating routine processes
 Increasing service speed
 Improving data processing accuracy and speed

According to Business Insider, AI is predicted to save the banking sector $447 billion by 2023
and about $1 trillion by 2030.

Despite all the benefits AI provides for the finance industry, it also has certain drawbacks.
Forbes claims that the use of AI exposes the sector to dangers including cyberattacks, incorrect
credit risk assessment, and the dreaded eradication of human capital and employment, which will
be clarified further in this article. But there is no denying that the advantages of AI outweigh the
risks.
What Roles Does AI Play in Finance?

The way we handle money in finance is changing as a result of artificial intelligence. There are
several application cases for AI in the financial and banking sector, from credit determinations to
quantitative trading and fraud detection and prevention. Let's look at 11 different applications of
AI in banking and business.

1. ‌Investment Management‌
It is more important for investors and asset managers to figure out how to integrate AI into their
investment operations as its influence in the financial sector grows. With AI, investment
managers can quickly and continuously produce investment ideas by analysing technical and
fundamental statistics, creating prediction models, and building trading strategies. AI also makes
investing a passive process that requires no oversight, which lowers costs while also increasing
revenue.

AI is also applicable to:

 portfolio administration
 management of risk
 monitoring of compliance
  Automation of analytics
 task automation in the workplace
Deloitte found that Man Group's hedge fund, which uses artificial intelligence to handle more
than $12 billion, has quadrupled the fund since 2014.

Investment management has not yet fully utilised AI's promise. According to the Alan Turing
Institute, 9% of hedge funds use AI and machine learning for asset management and investment.
But it's anticipated that this number will rise over time.

2. Risk Assessment
Organizations must raise the accuracy with which they process financial data as the volume of
data they process grows. For human hands and brains, this is, unfortunately, all but impossible.
This leaves room for the fraud risk that is currently destroying the majority of financial services
organisations. According to a recent PwC analysis, fraud incidences averaged six per firm and
were recorded in 47% of the reviewed companies.

A business must examine each transaction in massive data sets in order to spot even the smallest
risk. AI can help in this situation. Financial organisations can now quickly sift through mounds
of data with the aid of AI auditing software and pinpoint anomalies that help with risk
assessment and reduction.

Financial firms are no longer need to perform quarterly or yearly audits because AI makes
auditing work easier. Instead, they may have the AI perform a monthly analysis. Companies can
identify and reduce risks as soon as they arise thanks to continuous audits.
CONCLUSION :-
There is no doubting that in the financial industry, banks have benefited most from AI. Banks
have been able to thanks to AI to:

 Robotic process automation can help cut operational costs.

 better your management of customer relationships
 Enhance regulatory compliance and fraud detection
 Streamline credit assessment procedures
 Streamline investing procedures
 to better manage debt
The majority of the financial sector is made up of retail, commercial, and investment banks.
They are therefore also the main winners from AI in finance.

With the assistance of data scientists, AI in finance is still in the early phases of development.
Financial AI will undoubtedly see more incremental and architectural innovations in the years to
come, despite the disruptive advances that have resulted from it.

There has never been a time in history when humans have not innovated. Based on AI's ongoing
development, it makes sense to predict that it will continue to discover new applications and
further entrench itself in the financial sector.

The following AI advancements could soon be seen in the finance industry:

 expanded financial institution data sharing

 Natural Language Processing Improvement
 increased access to credit
 bias in algorithms is eliminated