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AComprehensive Studyon Integrationof Big Dataand AIin Financial Industryandits Effecton Presentand Future Opportunities
AComprehensive Studyon Integrationof Big Dataand AIin Financial Industryandits Effecton Presentand Future Opportunities
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Article in International Journal of Current Science Research and Review · January 2024
DOI: 10.47191/ijcsrr/V7-i1-07
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ABSTRACT: This study evaluates the substantial influence of AI-technologies in the finance industry, with advancement expected
to accelerate in the next few years. It also forecasts the expansion of AI adoption across various business sectors and the integration
of AI-based operational networks with existing commercial systems to meet consumer demands. The financial industry will blend
AI-based transaction channels with established systems, enhancing the customer experience and efficiency. This integration will
streamline and advance transaction processes, making them more responsive to customer demands. The standard change in customer
dealings is expected to be a significant transformation in the financial sector. The transformative potential of Big Data and AI in the
financial sector goes beyond operational improvements; these technologies will create new opportunities for growth and
development, giving financial institutions a modest point in operational efficiency and innovative product and service offerings.
This study aims to investigate the overall impact of the convergence of Big Data and AI on the financial industry. It anticipates
increased revolution, diversification of commercial applications, and smooth AI integration into existing systems. These
technologies will shape the financial environment in the future, offering new opportunities for industry participants and consumers.
I. INTRODUCTION
Big Data analytics is typically the technical process of analyzing massive amounts of data to discover patterns, linkages,
market trends, and customer preferences information that can assist businesses in making better-informed decisions. Artificial
intelligence is the capability of computer systems to perform tasks that generally require human intelligence, such as speech
recognition, decision-making, and pattern understanding.
In the age of the digital revolution, the financial industry is undergoing significant changes. There has been a drastic shift
in the way financial institutions operated in the past, and this has become possible by the integration of AI and Big Data in the
finance industry.
Every single day, the financial industry generates enormous data, ranging from customer information to transaction records.
All praises to digitalization, these data are not only kept confidential but can also be quickly provided to customers when required
for strategic planning and decision-making. With the advancement of these digital technologies, enormous datasets can be efficiently
handled, analyzed, and recorded. Furthermore, unstructured data can be converted to systematically structured Data. Scam detection,
credit grading, and customer relationships can be managed more efficiently due to the integration of these technologies into the
system [1].
In finance, deep reinforcement learning is used. Artificial intelligence, particularly reinforcement learning, can optimize
hedging tactics in derivative markets [2]. IoT and banking integration are evolving, with AI and Big Data becoming increasingly
crucial in understanding data from interconnected financial equipment [3].
While not entirely financial in nature, AI and machine learning have a broader impact on the future of labor. They provide insight
into how these technologies, including their applications in finance, are influencing the labor market [4].
Due to the integration of AI and Big Data in the finance industry, it is progressing toward digitalization and leading to an
effective transformation. In addition to changing the financial services industry, these technologies are opening up previously
unheard-of possibilities for expansion and innovation. Big Data offers a multitude of information that was previously
incomprehensible. It is usually classified and identified based on its size, speed, and variations. AI tools, especially in machine
learning (ML), aid in the evaluation and management of credit and its related risks in the finance industry [5]. Nowadays, financial
markets are utilizing this information to gain awareness of market demands, customer preferences, and scam evaluations.
66 *Corresponding Author: Sina Ahmadi Volume 07 Issue 01 January 2024
Available at: www.ijcsrr.org
Page No. 66-74
International Journal of Current Science Research and Review
ISSN: 2581-8341
Volume 07 Issue 01 January 2024
DOI: 10.47191/ijcsrr/V7-i1-07, Impact Factor: 6.789
IJCSRR @ 2024 www.ijcsrr.org
The importance of investigating how the integration of Big Data and AI can influence the financial markets and provide insights
into challenges and opportunities for the present and future cannot be underestimated. If the financial market aims to be innovative,
and progressive, and provide customers with better services, it must acknowledge these changes.
This research intends to evaluate the current influence of AI and Big Data in the finance industry, examining how they can
contribute to the industry’s future growth and identifying the necessary changes these industries should implement in their systems.
In doing so, it aims to provide a complete image of the evolving financial landscape and assist stakeholders in exploiting the potential
of these disruptive technologies.
III. IMPACT OF AI AND BIG DATA IN BANKING INDUSTRY AND PRESENT AND FUTURE OPPORTUNITIES
AI and Big Data are transforming the banking industry in various ways, including enhancing customer experience,
improving risk management, increasing efficiency, and creating new business models. Fraud poses a significant challenge for banks
and financial institutions, with potential losses reaching billions of dollars annually. These institutions often keep sensitive data
online, increasing the risk of security breaches. As a result, technological advancements have made financial fraud a major threat.
Earlier versions of fraud detection systems relied on a set of guidelines that today's fraudsters can easily circumvent. Therefore, an
increasing number of businesses are turning to machine learning to identify and stop illegal financial activities. AI has the potential
to help banks improve their efficiency, reduce costs, and enhance customer experience [19]. Here are some examples of how AI and
Big Data are impacting the banking industry and the opportunities they present for both the present and the future:
● Customer Experience: The integration of Big Data analytics, artificial intelligence, and blockchain technologies in
business and management opens doors for present and future opportunities. The potential of these technologies lies in
transforming business operations and creating new business models through digitalization [20]. AI and Big Data can help
banks provide personalized and seamless services to customers through chatbots, voice assistants, robo-advisors, and
recommendation systems. For example, ChatGPT is a language model that understands and generates human-like responses
to user questions using natural language processing and machine learning. Banks can use ChatGPT and similar models to
offer 24/7 customer service, financial advice, and product suggestions.
● Risk Management: AI and Big Data can help banks in detecting and preventing fraud, money laundering, cyberattacks,
and other risks by analyzing large volumes of data and identifying patterns, anomalies, and behaviors. Cyber-security is an
application of AI that is specifically designed to protect computer networks, programs, and data from attacks, illegal access,
amendments, or destruction [21] For example, AI can help banks monitor transactions, verify identities, flag suspicious
activities, and alert customers and authorities in real time.
● Efficiency: Another significant contribution of AI is its automation, providing authentic insights and recognizing patterns
and trends in datasets, thereby making tasks more efficient and less time-consuming [22]. This helps reduce costs, errors,
and interruptions and enhances overall value and efficiency. For instance, Artificial intelligence assists banks in identifying
the reliability of borrowers, providing their customers with financial loans, and hence processing their applications for
loans in a smooth and transparent way.
● Business Models: Predictive analytics, social banking, behavioral finance, and open banking are some of the creative and
novel services that banks offer, made possible by the tools of Big Data and AI in the Era of digitalization. These services
improve the quality of banking, enhance customer relationships, and help create new revenue streams. For instance,
artificial intelligence assists the banks in detecting data on the customer’s preferences and offers them solutions to their
problems within the time frame.
IV. IMPACT OF AI AND BIG DATA IN STOCK INDUSTRY AND PRESENT AND FUTURE OPPORTUNITIES
AI and Big Data are also significantly impacting the stock industry, enhancing trading strategies, improving market
efficiency, and creating new investment opportunities. A survey has found that insurance claims are the most unsatisfactory part of
the entire insurance product consumption process. This is because the claims process often requires a significant amount of detailed
documentation. In case of dispute, multiple investigations and verifications are required, making the process complex and draining
for customers. Moreover, at the same time, there are many cases of unreasonable claims in today's insurance industry. This can be
attributed to policyholders hastily signing contracts without understanding the terms and conditions thoroughly. Additionally, some
insurance companies also suffer from misleading sales and lax underwriting. Compared with traditional manual claims, intelligent
claims can be quickly viewed, accounted for, and fixed, which can save a lot of time and improve the efficiency of claims processing.
Here are some examples of how AI and Big Data are impacting the stock industry and its present and future opportunities:
● Trading Strategies: According to a paper published in The Journal of Finance, algorithmic trading has a positive influence
on the financial market. The authors of the paper analyzed the effect of algorithmic trading on market quality and found
that it narrows spreads, reduces adverse selection, and enhances the informativeness of quotes [23]. AI and Big Data can
help traders and investors analyze large amounts of data from various sources, including market prices, news, social media,
and sentiment, to generate insights, signals, and predictions for optimal trading decisions. For instance, AI algorithms can
perform trades more quickly, at lower costs, and with less human bias, while also having the potential to scan market
anomalies and provide clear and transparent trading opportunities. Furthermore, AI plays a significant role in structuring
trade patterns and adaptive trading strategies, enabling them to learn it deeply and give feedback to adapt according to the
updated market.
● Market Efficiency: Efficiency and transparency in the stock market are maintained by AI and Big Data by enhanced
liquidity, reduced information asymmetry, and lower transaction costs. For instance, AI becomes instrumental in aiding
the market customers to get access and process their relevant information within their time frame including their earnings
reports, financial statements, and corporate actions, and hence reduces hustle and bias. Besides this, detection of market
mishandling, scams, and mismanagement are also eliminated, supervised, and regulated by AI.
● Investment Opportunities: In research conducted by Roncalli (2018), the significance of machine learning (ML) in
trading is explained. The study highlighted how AI tools enhance the validity of factor models and portfolio optimization
[24]. These tools help in the creation of innovative services such as robo-advisors, smart beta, and thematic investing. For
instance, robo-advisors can provide personalized financial advice, automation, and portfolio management based on the
investor’s demands and preferences. Additionally, Smart Beta can integrate the benefits of both passive and active investing
by the use of AI and Big Data. AI and Big Data are also used in Thematic investing to recognize and invest in long-term
trends and themes, such as ESG, technology, and healthcare.
V. IMPACT OF AI AND BIG DATA IN INSURANCE INDUSTRY AND PRESENT AND FUTURE OPPORTUNITIES
AI and its tools have a significant influence on every aspect of insurance, from allocation to financing, pricing to claims.
AI and its advanced technologies are already shaping distribution and underwriting, with strategies being valued, purchased, and
bound in near real-time [25]. The stock market may be the most sophisticated technique. A person exchanges shares for stocks with
an entrepreneur and gets some cash back in the meanwhile. Following this model can be a potential investment strategy. However,
at this stage, costs and liquidity may not be stable. Machine learning is a kind of equipment to encourage us to achieve what we
want. ML has different techniques and methods to implement the prediction framework, for instance, fundamental analysis,
technique analysis, market computation, etc. Academic research suggests that the usage of artificial neural networks, comprising
recurrent neural networks, which efficiently apply machine learning, is the most evident technique [26].
Here are some of the main impacts and opportunities of AI and Big Data in the insurance industry:
● Customer Experience: AI and Big Data can help insurers provide personalized and seamless services to customers through
chatbots, voice assistants, robo-advisors, and recommendation systems. These technologies can offer 24/7 customer
service, financial advice, and product suggestions based on the customer’s needs, preferences, and behaviors.
● Risk Management: AI and Big Data can help insurers detect and prevent fraud, money laundering, cyberattacks, and other
risks by analyzing large amounts of data and identifying patterns, anomalies, and behaviors. These technologies can help
insurers in monitoring transactions, verify identities, flag suspicious activities, and alert customers and authorities in real-
time.
● Efficiency: Automation, which is an innovative and widely used tool of AI and Big Data, assists insurance market
consumers in various processes such as underwriting, pricing, claims, compliance, reporting, and auditing. This helps
reduce the cost of services, enhance value, and improve efficiency in the market. AI would also help to detect the reliability
of the customers and provide them with insurance services in streamline. Not only that, it assists the insurers in getting
loans in less time.
● Business Models: AI and Big Data help the insurance market to create services tailored to customers’ preferences and
demands, providing solutions to their financial problems within their timeframe. Due to these services provided by the
industry there is rapid growth in consumer relationships loyalty, satisfaction, and revenue.
AI and Big Data are not only changing the financial industry, but also creating new challenges and opportunities for them.
Some of the challenges include ensuring data quality, security, and privacy, complying with regulations and ethical standards,
managing talent and skills, and fostering trust and transparency. Some of the opportunities include collaborating with FinTech
and other players, leveraging cloud and edge computing, and adopting agile and customer-centric approaches. To succeed in
the AI and Big Data era, the financial industry needs to embrace innovation, transformation, and differentiation.
VI. METHODOLOGY
A. Study Type
This research adopted a quantitative cross-sectional approach through a survey to evaluate the influence of Big Data and
AI in the Financial industry and current and future opportunities.
B. Scope of the Research
This research will focus on the following areas:
● Impact of Big Data in Finance: The different sources of Big Data and AI which are connected to the finance industry,
data collecting methodology and insights can be obtained from it.
● AI in Finance: Various AI tools like ML Machine learning, Natural Language Processing (NLP), and Robotic Process
Automation (RPA) and their relevance to the finance industry will be identified.
● Impact of AI and Big Data in Future Trends: This Study will explore the future demands of AI and Big Data in finance
and how they can positively reshape their future.
VIII. RESULTS
Significant results were generated from the survey conducted by the questionnaire. The main findings of the research
indicated that the integration of AI and Big Data into the finance industry increased the current opportunities, such as increased
business rates, customer satisfaction, less pricey, less time consuming, scam detection and management credibility, and creation of
new opportunities in the industry.
A. Overview of AI and Big Data Integration
The integration of AI and Big Data analysis revealed comprehensive and efficient results in the financial industry. These
results provide insights into adoption rates, key players, and emerging trends within the industry.
B. Experimental Research Findings
The results of the experiments used in this research provided valuable insights into the influence of AI and Big Data on
financial growth. The experiments showed that when the financial industries integrated AI and Big Data into their systems, yielded
positive outcomes. The following are some statistics of experiments conducted in different financial sectors. The experiments were
carried out in different phases to precisely analyze the potential of AI and Big Data in these sectors.
A comparative analysis between AI and Big Data was done to check the efficiency and demand of both and the following
results were achieved.
It was evaluated that the stock market was more familiar with and actively utilizing AI and Big Data in their job structures. Due to
integrating AI and Big Data into their systems, they were growing more in the finance industry than the rest of the industries.
XI. RECOMMENDATIONS
● For a successful and diversified financial system, AI and Big Data must be used for generating quality data, validation,
data cleansing, and governance.
● Cybersecurity is another significant application of AI and Big Data that should be incorporated into financial setups to
ensure the confidentiality of sensitive data, detect scams, and ensure transparent audits.
● Financial sectors should also implement talent management strategies and provide training in ML and Data Science to
acquire individuals with expertise in digitalization and deep learning.
XII. CONCLUSION
In conclusion, this investigation has explained that if a structured implementation of AI and Big Data is done in the finance sector
it can raise the potential of financial industries to the next level. This represents not only a transformation of the current
functionalities within financial industries but also a significant step toward progression and development. The combination of AI
and Big Data is highly innovative, if used properly, it has the potential to reshape current opportunities and nurture future
opportunities for the welfare of mankind.
72 *Corresponding Author: Sina Ahmadi Volume 07 Issue 01 January 2024
Available at: www.ijcsrr.org
Page No. 66-74
International Journal of Current Science Research and Review
ISSN: 2581-8341
Volume 07 Issue 01 January 2024
DOI: 10.47191/ijcsrr/V7-i1-07, Impact Factor: 6.789
IJCSRR @ 2024 www.ijcsrr.org
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Cite this Article: Sina Ahmadi (2024). A Comprehensive Study on Integration of Big Data and AI in Financial Industry and its
Effect on Present and Future Opportunities. International Journal of Current Science Research and Review, 7(1), 66-74