AI in Financial Sector: Everything You Need to Know About the Future

Artificial Intelligence (AI) is the talk of the town, with its augmenting capabilities revolutionising various sectors in the last few years. While AI has been incorporated in the financial sector, this industry is not completely automated. In fact, a report confirms that AI could be the game-changer in this domain by increasing competition and innovation.

Humans still have to operate at some levels, which gives AI limited control. However, in the future, it can unleash unprecedented efficiency, risk management, personalisation, and customer support without human intervention. 

Benefits of AI in the Financial Sector

Here are some of AI’s features that can benefit the financial sector. 

• Analysing the Investment Opportunity

Using artificial intelligence, banks and financial institutions can provide a better deal that matches your financial requirements. For example, you can evaluate which insurance plan is best based on your current financial standing and other factors. 

Similarly, artificial intelligence can be used to make share market investments, as it can analyse the data and create reports efficiently. With the share market being a time-sensitive avenue, this will help you grab the perfect opportunity and make an informed decision. 

• Automate Investments

With artificial intelligence in the finance sector, you can set mandates to invest or recall your investments. Algo trading is an existing concept that allows you to place orders faster and more frequently. However, it works on a defined set of instructions, beyond which it does not perform any task. 

With AI integration, this process will enhance over time as it can make calls based on your financial goals beyond the fixed instructions. For example, it can purchase more shares if the prices are low and sell them at a higher price without you interfering. 

Beyond share market investments, it will also help you file tax returns faster and with minimum errors. Financial institutions can also use it to streamline the loan process. You can enjoy all this and more at affordable costs.

• Evaluating the Financial Requirements 

You can also use artificial intelligence to evaluate your financial needs and the ideal action to arrange funds. For example, say you are exploring loan options products on the Bajaj Markets website. Instead of visiting pages individually and comparing the data, you can simply ask AI to create a report for the available data on the website. 

This way, it will give you all the required data based on the accurate information on the website. However, it is important that you take information directly from the official financial institution’s website. You can always use data from reliable financial marketplaces to compare offers from multiple lenders.

• Risk Analysis 

It also plays a key role in transforming the risk management and compliance factor in the finance industry. This is because it helps process data faster and verify information from multiple sources seamlessly. It may also identify traders that violate certain rules and regulations, saving you from financial loss. 

It can detect risk and any fraudulent activities that you may not notice between the fine lines of terms and conditions. This way, it will process information accurately and reduce the risk of illegal fund transfers, be it for investment or lending processes. 

• Virtual Assistants

Banks and NBFCs already use artificial intelligence to assist their existing and potential customers. Most NBFC websites, banking portals, or personal loan app have a chatbot. Additionally, Interactive voice response (IVR) also improves the customer service 

Risks of AI in the Financial Sector

While it comes with many benefits, some risks come with integrating artificial intelligence into the financial sector. 

• You have to provide sensitive information regarding your finances for AI to make accurate predictions, which puts you at risk of data breach 
• Since it works on an algorithm, you must train it before it can make accurate calls on your behalf
• It is not very accurate at detecting outdated information from current information, which can be risky in financial matters 
• The security strength of AI is still unknown, which puts it at risk of cyber-attacks

While these risks are very prevalent, the rewards can also be higher. Considering all the risks and rewards, it is inevitable not to eliminate AI from emerging as a revolutionary tool. As artificial intelligence evolves, it will penetrate the financial landscape, presenting new opportunities and challenges for us to deal with.