The Impact of Artificial Intelligence (AI) on Finance
“Technology, through automation and artificial intelligence, is definitely one of the most disruptive sources” ― Alain Dehaze
3 min read
The Impact of Artificial Intelligence (AI) on Finance
“Mutual funds were created to make investing easy, so consumers wouldn’t have to be burdened with picking individual stocks” ― Alain Dehaze
3 min read
Artificial intelligence (AI) is reshaping how people see and interact with the world, and the Finance industry is no exception to this.
Already, we are witnessing new ways of writing about financial markets and ways of streamlining data analysis processes on a massive scale in just the blink of an eye. With its ability to process such vast amounts of data at such high speeds, whilst also then having the ability to make complex decisions, AI is transforming various aspects of finance, from investment management to risk assessment and customer service.
How is AI doing this? Find out below!
The Impacts on Investment Management
When we look at impacts on investment management, we can see that artificial intelligence (AI) is changing how analytics are used to identify patterns, forecast market trends, and refine investment strategies. These AI algorithms are able to formulate data-driven patterns and correlations that human analysts may overlook.
This could lead to fund managers and investment analysts making better informed decisions, leading to enhanced portfolio performance. However, whilst AI processes are very useful in such cases, it is important to retain a human element as relying on AI algorithms (or any algorithms for that matter) can come with issues that are often realised too late.
Such issues can include their predictive capabilities being manipulated or potentially producing the wrong answer that results in a negative return. Whilst not the norm, these potential risks should be recognised and protected against.
Improving Customer Experience
You may notice when visiting various websites that a key way AI is improving the customer experience is through the implementation of chatbots and virtual assistants. The financial sector is no exception to this and you could well be chatting to an AI bot when visiting investment websites!
These AI-driven tools are able to stay awake when a human counterpart cannot, providing 24/7 support and thus improved customer satisfcation and operational efficiency.
Such virtual agents can handle routine enquiries, transactions and even engage in potentially meaningful conversations by addressing customer queries promptly and accurately. In addition, AI systems can allow humans to spend more time on more complex issues, streamlining operations and reducing costs.
Strengthening Risk Management
AI-powered risk management systems analyse real-time market data to identify potential threats and implement proactive risk mitigation measures. Detection of such anomalies and enhancing fraud detection can protect financial institutions against fraudulent activities.
Furthermore, AI enables financial institutions to conduct more accurate and comprehensive risk assessments by, as mentioned already, analysing vast amounts of data from various sources. Such an approach to risk management can allow organisations to anticipate and mitigate potential threats before they escalate, thereby safeguarding assets and maintaining stability in the financial markets.
Facilitating Regulatory Compliance
AI can play an important role in ensuring regulatory compliance within the financial industry. By monitoring vast amounts of data and analysing transactions, AI algorithms can help financial institutions adhere to evolving regulatory requirements, reducing the risk of non-compliance penalties and enhancing transparency.
By streamlining the process, corrective action can be taken promptly, ensuring continued compliance and meeting of regulatory standards. By automating compliance procedures, AI not only reduces the burden on compliance teams but also minimises the likelihood of human error, ensuring accuracy and consistency in regulatory reporting.
It is also possible for AI-powered compliance tools to adapt to changes in regulations more efficiently than traditional manual methods. Machine learning algorithms can quickly incorporate updates to regulatory frameworks, ensuring that financial institutions remain up-to-date and compliant with the latest standards. This agility in regulatory compliance can help navigate complex regulatory landscapes more effectively, mitigating the risk of regulatory fines and reputational damage while maintaining the trust of Clients and customers.
Robot Revolution or Handy Companion?
It would likely be inadvisable to rely 100% on AI processes throughout your business, day-to-day life or any other circumstances. Hence, it is probable that human operators will be necessary going forward.
This means that AI is able to complement the day-to-day tasks of professionals in the finance sector and enhance the services that are able to be provided to Clients.
However, AI is not right for everyone! There are certainly downsides to using AI, including a potential lack of personalisation, potential for manipulation and more. Certain areas may require the diligent attention of a human and are potentially outside of the remit of AI.
As with stock markets, the future cannot be known and AI will likely continue to develop over the coming years.
With Patterson Mills, you can be sure of a 100% human service, tailored to you. So, get in touch with us and book your initial, no-cost and no-obligation meeting and talk to one of our Advisers today!
Send us an e-mail to contactus@pattersonmills.ch or call us direct at +41 21 801 36 84 and we shall be pleased to assist you.
Please note that all content within this article has been prepared for information purposes only. This article does not constitute financial, legal or tax advice. Always ensure you speak to a regulated Financial Adviser before making any financial decisions.
