February 2, 2023
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What is Artificial Intelligence?
Artificial Intelligence (AI) as an emerging applied practice has paved the way for structures and systems in various areas and contexts to adapt to the dynamic demands of the world. Artificial Intelligence as defined by Britannica dictionary is “the ability of a digital computer or computer-controlled robot to perform tasks commonly associated with intelligent beings.” The transfer of human intelligence and characteristics to machines has defined work completion, effectiveness and efficiency in a whole new level where humans are either “replaced” by these developments or are helped in easing the processes involved.
Artificial Intelligence seems like a modern concept but some would testify that its idea circulated a long time ago. According to a write-up made by Lewis (2014), people in history such as the ancient Greeks, Chinese and Egyptian engineers had myths about robots and built automatons respectively. However, the modern idea of Artificial Intelligence has probably been more concretized when computers made it to the scene. The history of Artificial Intelligence lives on and is even making its way through the world of finance.
What is Artificial Intelligence in Finance?
Have you ever heard of Artificial Intelligence in Finance? Have you ever exchanged messages with a bot when you inquired about a new financial product through your bank? Have you ever made a credit card application without going through the hassles of doing it face-to-face? If you were able to engage in one or a combination of these experiences, then you have definitely interacted with what is known as “artificial intelligence in finance.”
The industry of banking and finance are one of the most important sectors in our society. The movements in these industries help in financial literacy, service and product acquisition. The many strings of services offered need a network of people who can reliably comply with the demands and assure that customer service is on point. Yet to amplify the service a human gives, a well-crafted system must be in place.
Artificial Intelligence is not limited to beefing up the list of services or the accommodations that the service provider can give. It also improves credibility and lessens error in transactions and interactions, which in return adds value to the service. The realization of the potential benefits Artificial Intelligence can bring to the table has allowed businesses, education and the digital world adapt aggressively.
How is Artificial Intelligence Applied in Finance?
There are a number of ways AI is applied in finance. Some of the common examples may be categorized into what can be referred to as the 8 Ps of Artificial Intelligence in Finance. The following are:
Is Artificial Intelligence in Finance the Way to Go?
While it is true that AI speaks volume in terms of practicality and productivity, it also has its disadvantages. Any structure and system where Artificial Intelligence is applied has an algorithm. As known, algorithm is the set of rules that are followed in calculations, problem solving and other related demands. To be more precise, it is the process that a computer has in order for it to work well in accordance to the needs and demands of the user.
Processes in banking and finance may run faster and seamlessly because of an algorithm that is dependable. Yet, when the algorithm is improper, it may cause unnecessary errors or obstacles, which can lead to faulty results. Thus, an algorithm must be properly designed and implemented.
Another disadvantage is the price attached to its adaptation. Because of the high cost, it may be impossible for every financial company to readily absorb Artificial Intelligence in their system. This creates a credibility gap among finance companies since it is believed that Artificial Intelligence enhances the standing of an institution.
Artificial Intelligence also has its pros and cons in employment. One extremity explains that employment opportunities may be reduced due to the replaced efficiency provided by AI in a company. On the other end, it may also open novel chances to those who can contribute to the study, conceptualization, design and implementation of AI in the finance industries.
Moving Forward with Artificial Intelligence in Finance
So is this the way to go? Will we live in a financial world completely operated by machines, computers and robots? Will this replace the beauty of human interactions?
The results of adapting AI in finance cannot be watered down. Over the years, it has truthfully impacted all of us. In this global pandemic, AI has defended the need for such science to exist. Without AI, it may take weeks for one to update his billing information, may take months to process and claim an insurance payout or years to resolve identity theft.
Digging deeper, the science of Artificial Intelligence does not discount the capabilities of humans. It cannot and will never replace humans. In fact, it highlights who mankind is; what he is capable of; where he draws his creativity from; when he integrates an idea into an implausible work; why he recognizes the need for algorithms and how he does not put the human brain sheltered in a box.
Artificial Intelligence may or may not be our endpoint but it will always be a valuable product of the human mind and so we will move forward it!
