Role of Artificial Intelligence in Future Finance
Nowadays, AI is the largest growing technology in every sector of life. AI has a transformative impact on the modern economy and revolutionized the financial services industry. In finance sector, AI is used rapidly that automates repetitive tasks, improves the work efficiency and augment the human decision making. Artificial Intelligence in finance is transforming the way of interacting with the money. AI is helping the financial industry to optimize the processes from credit decisions to quantitative trading and financial risk management. Almost every company in the financial technology sector has already started using AI to save time, reduce costs and add value in their products.
Finance Industry adopting AI
89% of European banks have started working with Artificial Intelligence. Finance professionals strongly believe that AI can be used to manage and control the finance in better way. We already see that finance professionals believe in AI’s capabilities in their domain.
Risk Assessment and Fraud Detection
An important domain of finance industry is “Risk Management”, almost 40% of AI deployment in finance is managing the risk. In risk management, the processing of large amount of data is handled in short time through AI. A task in financial sector that would take too much time for human to do, but AI and their algorithms analyze the history of risk cases and identify early signs of potential future issues much faster than human mind.
Artificial Intelligence has been very successful to detect financial fraud and the future is looking brighter every year, as machine learning* is catching up with criminals. *Machine learning is the technique of data science that provides big data to machines.
AI is especially effective to preventing credit card fraud, which has been growing in recent years due to high volume of e-commerce and online transactions. Fraud detection system will analyze the client behavior location and buying habits and triggers a security mechanism, when something seems out of order and contradicts the established spending pattern.
Artificial Intelligence has minimized fraud and malicious activities in finance sector through biometrics, as AI provides recognition solutions, such as face, voice and fingerprints recognition. AI has very quick access to this data than any other technology and ensures good security. Banks are rapidly adopting AI biometric techniques to prevent fraud.
Financial Advisory Services
In financial advisory services, in order to reduce the rates of commission on individual investments, machine learning can do calculations quickly and charge no commission; AI calculates dozen of payments in microsecond that humans cannot work for a single down payment. AI is advancing at its rapid pace in financial advisory sector, but there is still wide gap, where machines can truly understand human sentiments to provide financial advice at the level of current human advisors, we might get solution of this in future through Artificial Super Intelligence (ASI) that we discussed in our previous blog.
AI has also improved the customer services in finance industry, especially in Banking and Insurance sector through AI Chatbots.
Investment companies have been relying on computer and data scientists to determine the future pattern in trading. Data-driven investments have been rising steadily over the last 5 years. It is also called high frequency trading. This kind of trading has been expanded rapidly across the world’s stock market. AI offers multiple significant benefits in trading, as it finds out the pattern very quickly than human mind. For example, Intelligent trading systems monitor both structured (database, spreadsheets etc.) and unstructured (social media, news, etc.) data in a limit of the time, it would take much time for the people to process it. As we know ‘’time is money’’ truer in trading. Faster processing means faster decisions, which means faster transactions that is possible through adopting AI.
We can see AI is also helping us to manage our personal finance. Personal financial management is one of the recent developments on the AI-based wallet. Wallet started by a San Francisco based setup uses to build algorithms to help the consumers to make smart decisions about their money, where to spend it. AI accumulates all the data from their web footprint and create their spending graph. That’s why it helps to save time from making lengthy spreadsheets or writing on a piece.
In nutshell, based on these facts, it is time to embrace the AI revolution in finance sector. We need to understand the importance of Artificial Intelligence from the technology to the role of people in balanced and structured way.
Cubent and Artificial Intelligence:
No doubt, Technology plays a vital role, but it is not technology that creates success, it is people who uses the technology & makes it successful. Technology needs data, on the basis of the most accurate data that technology provides the leaders of the businesses take the right decision. In addition, the success of organization is to keep the businesses updated that is only possible to move from the old to new technologies.
New technology leaps happened from time to time throughout history. We are in the era of game changer; this game changer has many names like technical revolution, digitalization, era of machine learning and artificial intelligence.
I planned to write first blog of Cubent about Artificial Intelligence (AI). AI is the key feature of Cubent Ltd, it will not be wrong to say that AI and Machine Learning are the backbones of Cubent. Dedicated team of Cubent is doing research and development on AI and Machine Learning on daily basis.
You have heard a lot about AI, so what is Artificial intelligence:
Artificial intelligence refers to a machine’s ability to imitate human cognitive abilities like problem solving and learning. These skills also require an understanding of language, speech and strategic thinking. We already encounter numerous applications of artificial intelligence on daily basis. For example, asking Siri for directions, when driving past Google’s autonomous vehicles, using self-parking or cruise control features, they all use AI applications. With AI, we can predict the mistakes, before they happen.
When I started to write about Artificial Intelligence, and came across these three types of AI, maybe there will be more categories of AI in future, but I found following three common ones and thought to write about them.
Artificial Narrow Intelligence:
Artificial Narrow Intelligence (ANI) is also known as “weak” Artificial Intelligence. ANI is programmed to perform single task. In simple words it is limited part of mind. [Siri Cortana & Google assistant are all examples of narrow AI]. ANI system can do tasks in real-time but they get information from a specific data set. This is the reason; ANI does not perform beyond its single task that is assigned to it to do. Normally, Narrow AI works within a pre-determined and pre-defined range.
Artificial General Intelligence:
Artificial General Intelligence (AGI) or “strong” Artificial Intelligence refers to machines that exhibit equivalent to human intelligence. In other words, AGI can successfully perform any intellectual task that a human being can do. Many people might be familiar with the concept of Artificial General Intelligence. AGI computer could be equally intelligent to human in every aspect. These machines would be capable of performing the same kind of intellectual tasks that humans perform with the same level of their qualities. Apple’s Co-founder Steve Wozniak suggested doing the coffee test as an indicator for AGI. During the test, a robot has to enter an average home and attempt to brew a cup of coffee. This means finding all tools, figuring out how they operate and then performing the task. A robot, who was able to complete this test, this is considered as an example of AGI.
Artificial Super Intelligence:
Artificial Super Intelligence will surpass human intelligence in many aspects form creativity, to general wisdom, to problem solving, machines will be capable of exhibiting intelligence that we have not seen in the brightest amongst us.
ASI is the field of research that Stephen Hawking has warned us about this. One of AI’s leading figures, Nick Bostrom has defined superintelligence as an intellect that is much smarter than the best human brain in practically every field, including scientific creativity, general wisdom and social skills. This slight or vast superiority to human intellect is disconcerting to scientists and laymen because its outcome is unknown. As a machine is capable of constantly learning and improving, itself and this process could be unstoppable.
In 2013, a computer had the intelligence level of a 4-year old child. In 2014, a computer was able to solve a mathematical problem so complex that the most intelligent human mind could not check for accuracy. Computer scientist and futurist Ray Kurzweil said that computer intelligence would reach human level by 2029, this is all possible due to ASI.
It is clear that AI has made the machines that are, in many ways, more capable than human minds. However, it will take a time before they are able to surpass human intelligence in every regard. When this day comes, the brightest minds on the planet will be aware of the risk of super intelligent computers and should be able to thwart any HAL 9000’s* before it is too late.
*HAL 9000’s is the first appearing in the 1968 film 2001. A space odyssey, HAL (Heuristically Programmed Algorithmic Computer) is an artificial intelligence and sentient computer on the Discovery 1 spacecraft, which controls the systems of the spaceship and interacts with the ship’s astronaut crew.