There have been many developments in the artificial intelligence (AI) and machine learning (ML) space over the past decade. From travel to healthcare to finance, many industries have adopted artificial intelligence, and it only continues to grow and get smarter.
So what is artificial intelligence?
While there are many variations to the definition of AI, we believe the following explanation does a great job of covering all aspects.
AI is a suite of technologies, enabled by adaptive predictive power and exhibiting some degree of autonomous learning. It dramatically advances our ability to recognize patterns, anticipate future events, create good rules, make good decisions and communicate with other people.
The financial services industry has implemented AI software in various areas to improve both the accuracy and timing of financial decisions. As the years go on, the AI software is becoming more refined and accurate as more data is presented to the database.
A survey on AI in the Financial Services conducted by the World Economic Forum found that financial institutions expect to become mass adopters of AI and expect AI to become an essential business driver across the financial industry within the next two years.
Read on to explore the various ways AI is changing the industry.
In financial modelling, artificial intelligence is already being used to automate the construction of financial models. This will save the financial modeller time, who would otherwise spend hours building the models. Since the model’s basic framework will be completed by the software and the modeller can now focus their attention on their areas of interest. Altogether, this will make the process more efficient, allowing the modeller to use their time productively.
From the relationship management side, artificial intelligence is being used on all fronts of client interaction to ensure that strong relationships between clients and their advisors are maintained. Some of the software today learns the client’s personality and, in doing so, learns their dispositions and tendencies. This will allow the advisor to know how best to approach the client to ensure a meaningful and productive meeting.
“Using AI soundly means industry professionals can focus on adding value to clients, particularly during those significant life-changing events where all the powers of empathy, understanding and nuance must be brought to bear – and which AI cannot deliver.” – Andrew Herberts, Head of Private Client Investment Management, Thomas Miller Investment.
Within the banks, artificial intelligence is being used to evaluate customers for lending products by using customer’s credit history reports, spending patterns, and current savings to minimize the risk. Also, artificial intelligence is being used by the banks for strategy implementation. It works by collecting historical data on the sector that the bank is entering and using it to make accurate estimations on the company’s success within that given sector. By having artificial intelligence evaluate the risk of entering a sector or selling borrowing products, the banks will be more secure and stable.
As the financial industry continues to implement AI software into their analytics, the models that the artificial intelligence software builds will become more accurate and robust over time. Over the next couple of years, it can be expected that these models will dominate the industry and will allow for the financial institution to be more efficient with their employees and customers.