Artificial intelligence has represented one of the most rapid advancements of the last decade. The discipline that was once the exclusive domain of mathematicians and university researchers has broken through into the mainstream, forming the backbone of many different consumer applications that help make today’s economy tick.
The financial industry has been one of the places that have most benefited from artificial intelligence. Let’s take a look at the various ways that this incredible technology is transforming how people shop, bank and invest.
The most obvious way that artificial intelligence has permeated the financial industry is through the widespread adoption of high-frequency trading, both at the individual and institutional levels. Nearly every investment bank, hedge fund, and brokerage operation now have high-frequency trading operations. Some of the pioneers in this field include names like James Simons, who was a renowned mathematics professor and contributor to a wide variety of fields before ever making his first trade.
Simons’ hedge fund, Renaissance Technologies, was one of the first trading firms to make extensive use of artificial intelligence. After making more than $10 billion using his closely guarded strategies, Simons quickly became the model that many other traders followed.
Online banking services and chatbots
The most expensive part of running any service-based company is paying your employees. With the increasing sophistication of artificial intelligence, not only can banks and other financial institutions now rely less on human agents to help give their customers world-class service, but they can also deliver this service virtually without wait times.
Artificial intelligence is being deployed across the industry to help customers with everything from everyday banking to more complex tasks, like setting up retirement accounts. This capability means that financial services professionals can spend more time on higher-order tasks while giving customers even better, more rapid service.
Fraud detection and prevention
While many people view the topic of security as boring at best and a personal nuisance at worst, the truth is that the one place where artificial intelligence is delivering the most value to customers is through the prevention of fraud. Artificial-intelligence-based applications can use highly sophisticated algorithms to detect any patterns that may indicate red flags. This has caused a noticeable drop in fraud rates. And that will ultimately translate to lower costs for the customers.