Right from fraud detection to selecting the right candidate for loans, risk modelling and customized customer experience – AI in Finance is revolutionizing the financial sector. It offers new product innovations and explores current trends to make predictive analysis that benefits both financial institutions and their customers.
AI in finance is no longer a theoretical future-thing, but is being widely used and inculcated in various processes, across different strata to improve the customer experience, which ultimately benefits both the parties involved. In this blog, we will explore how AI is used in finance, its applications, benefits and examples, and how Corient is redefining the role of AI in finance sector.
What is AI in Finance?
AI in finance is the use of Artificial Intelligent machines to streamline operations, predict changes in trends and curate risk management models within the BFSI Sector. Simply put, it is an intelligent machine that can learn on its own, assist professionals to reduce the time consumed on redundant tasks and analyze, interpret large sets of data – both structured and unstructured in providing accurate decisions for all.
AI in finance has been a game-changer, with Machine learning and Natural Language Processing – its subsets, creating sophisticated tools that can provide strategic insights and foster innovation. COVID-19 had an enormous impact on the world and has marked a red dot in the history, both within the finance realm and all the other service-providing bodies.
The result, is the emergence of automation tools that can reduce the workload, at the same time provide unique customer experience. It has reduced the expenses and has helped in making the bottom line better. With multilingual tools to assist in knowing what the customers want, to Speech to Text conversion tool – the employees can now focus on driving actionable strategies towards the financial goals.
The world has adapted, evolved and has come to terms with the both the destructive calamity and emergence of assist AI tools to solve all their queries. Contact us for customized AI solutions.
Applications of AI in Corporate Finance
One area where AI has made big strides is corporate finance, changing old ways of doing things and letting people make better choices.
Automate manual, time consuming task:
AI can take charge of the never-ending tasks such as data entry, invoice processing and reconciliations which can free the accountants time to focus on customer journey, while reducing human errors. The firm can completely focus on its goals and mission, delivering tangible results to the organization. What took its employees a significant amount of time in responding to customer’s query can now be done in an instant – providing unique, customized solutions to each of them.
Risk Assessment and Mitigation
AI systems can conserve resources while interpreting large amounts of data. The changing algorithm can predict potential threats and risk, which in-turn helps in developing mitigation strategies. This can help companies to make proactive decisions which in-turn benefits the company in the long run and protects their financial stability.
Predictive Analytics for Decision-Making
Advanced algorithms in AI in Finance analyze trends and consumer behavior, offering unique product and services at the end. Changing trends and its interpretation is done on the basis of large data sets gathered in the form of search queries, consumer’s buying and spending pattern and also the information they voluntarily give to third parties. This data within the financial realm can predict the changes in trading options, identify investment opportunities and provide instant solutions 24/7.
For corporates, it helps them in optimizing their budget, identify gap in resource allocation and forecast market trends. A company with all the advanced resources will not be able to make sound decisions without data to back it up. This is what AI does. It predicts the analyzed data for sound decision making.
Automating Financial Reporting and Audits
AI in corporate finance helps in the preparation of financial reports with utmost accuracy and precision. It automates the audits and report generation process, saving manual effort and cost. The companies can adhere to regulatory policies and avoid hefty fines that could get worse if they don’t keep up with new rules and guidelines.
When the company expands – it could still keep up with its work process, while remaining resource constraint. All manual, time-consuming tasks can be handled by AI, while its stakeholders can focus on building reliability and customer satisfactions for all its clients.
Role of AI in Personal Finance
AI isn’t just transforming corporate finance – it’s making personal finance more accessible and efficient for individuals.
Financial Advice
Based on the user’s goal, risk tolerance and financial health, AI can provide customized solutions to all. If the individual is looking to benefit from trading on a daily basis, the AI can analyze the market trends, historic costs and provide precise time to invest and exchange the value to money. The AI teaches itself and modifies its algorithm with changing trend and data input.
Fraud Detection
AI plays a crucial role in fraud detection on a personal level. It makes note of an individual’s buying behavior, preferred vendor, and the average sum of transactions done on a monthly or yearly basis. This data then will be compared with suspicious finance activity such as large amount transaction, unfamiliar location-based activity and more. The AI will then send an alert informing the person to validate if the activities are actually done by him/her. This way, it helps in fraud detection and prevention on an individual level.
Financial Planning
Let’s say you have a goal to get loan for your new dream home, or you are planning to allocate some money monthly dedicated to home repayment. AI can make things easier by helping you financially plan on how to manage your credit and debt reduction. It can provide a customized financial plan on how to repay your loan and what expenses you need to cut-off. It can also offer personalized recommendation on which investment opportunity to explore and how, and in what time can you repay the loan, or have your personal goals fulfilled.
Proactive Defense
Apart from providing precision and accuracy in financial report reading and data interpreting, AI unlike traditional cybersecurity methods not just anticipate potential threats, but also prevents them beforehand. AI makes use of latest knowledge and trends to identify new fraud tactics and take necessary actions in real time.
Let’s understand this with an example – You are using an AI-powered banking app. One day your AI detects access from unknown device or maybe from a location far from you. The app will then raise a flag and temporarily lock access to account, while sending you an alert of potential fraudulent action. This proactive defense of taking actions rather than just noting and informing is what sets AI apart. The proactive decisions safeguard the individual from all kinds of threats – both direct and indirect.
Real-World Examples of AI in Finance
JP Morgan Chase
The COiN (Contract Intelligence) AI system at JP Morgan Chase checks payment papers like invoices for fake or wrong information before the funds are released. This had saved JP Morgan an approximate of $150 million in the first year itself by analyzing the invoices with AI.
In 2019 it reduced its audit review operations by 360,000 hours per person. This helped the company and its force, focus on betterment of existing technologies and overcome any hurdles in customer journey and process. The company has reduced its commercial payment fraud from 3 to 1 % with the help of COiN AI system.
JP Morgan Chase is able to analyze around 12000 documents per second with its AI system, reducing human error and improving efficiency in its workflow.
BlackRock
BlackRock is an investment/asset management company focusing on providing a variety of services, some of which include risk management, and advisory solutions so all its client can experience financial well-being. Even before AI became a trend and a necessity, BlackRock understood its potential and started investing in AI to improve customer experience and boost operational efficiency.
Aladdin of BlackRock is an AI-powered application focused on evaluating individual investment as well as help with risk management. The company uses Aladdin alongside many other tools to analyze historical data and market variables to provide actionable insights, and make better investment decisions.
Benefits of AI in Finance
AI holds many uses for both financial companies and their customers, which makes it an important tool in the field of finance.
Automation
Companies can automate major portion of their workflow with AI, which can help reduce time taken for repetitive-monotonous tasks. This can enhance decision making, by providing actionable insights and predicting the outcomes beforehand so the company get’s the idea on what will take place for certain decisions.
Let’s understand with an example – A bank might opt to automate customer onboarding tasks and formalities with customized digital banking solutions – making it easier to avail services from anywhere, anytime. AI can help clients better understand bank, its core values and as to why it will be beneficial to clients. This actionable insight is given by AI – which can provide customized unique experience and solutions different for all. The process of compliance check, and customer queries can be handled by AI, reducing operational costs and time in the process.
Enhanced Accuracy
AI reduces human error and ensures utmost precisions in all aspects of the workflow. From zero error in data processing, documentation and clear interactions with clients, to right analytics and making data-driven prediction and decision, AI ensures utmost accuracy.
Customer Experience
The AI chatbots ensures 24/7 assistance, offering customized solutions to different queries. This improves customer experience and builds trust. As likely said in the above that Covid-19 has revolutionized the way people interact with service providers- It has enhanced focus on customer-centric solutions anytime, anywhere ‘n’ number of times, with user-friendly interface for easy navigation.
Speed and Data-Driven Insight
AI systems analyze large sets of data – both structured and unstructured to uncover patterns and trends. This enables the financial institutions to make informed decisions that too at a fraction of time as compared to normal employee, with accuracy in all folds of the work-flow process. This means faster insights to trading communications, investment strategies, compliance check and more.
Application of AI in Finance
A Detailed Insight
The evolution of AI applications has moved from theoretical benefits and uses to more complex routine usage. AI applications in finance have evolved tremendously, from automating monotonous processes and analyzing structured data to enhanced fraud detection, personalized financial advice, and much more.
Advanced Fraud Detection
Modern AI systems uses machine learning to analyze vast amount of data and make proactive decisions in real-time. From identifying fraudulent behavior and red flagging, to blocking the account temporarily, while informing the client, Fraud Detection with AI has lowered such activities on both corporate and personal level.
Risk Assessment and Management
Modern AI systems can interpret unstructured data such as news, articles, financial reports, and market sentiments to asses’ risks in investing, and help individuals make right decisions. This is done by visual presentation of data to users and risk management modelling – further driving them to make right actionable decisions.
Personalized Financial Advice:
AI in finance has reached new heights, offering custom tailored financial advice to individuals – on which investment opportunity to tap on, when to trade your stocks and how to reduce the expense while improving the bottom line. The robot-advisers are able to asses an individual’s preference, risk tolerance and financial goals, offering tailored solutions accordingly.
Two-way Communication
You do not need multiple customer support agents to respond to different customer queries. With AI 24/7 chatbots, customers can avail services and answer to the question by simply asking these bots. The AI answers replicate the conversations of that of humans, offering personalized experience to each by providing tailored solutions to all. In a way, it replicates the two-way human communication adding a touch of sentiment using NLP. This in-turn reduces the overhead expenses, allowing correct allocation of resources to employees, all while having sufficient time to focus on strategy formulations and training.
Conclusion
AI is undoubtedly revolutionizing the finance business by improving process efficiency, security, and client focus. AI applications range from corporate finance to personal finance, providing practical benefits such as cost savings, improved decision-making, and better customer experiences.
As financial institutions continue to embrace AI, its role in shaping the future will only grow. AI in finance is not just about automating processes or enhancing operational efficiency—it is about driving societal betterment and fostering innovation. Corient Business Solutions, a pioneer in leveraging AI within the BFSI (Banking, Financial Services, and Insurance) industry, is at the forefront of this transformation. With cutting-edge AI-driven solutions tailored for businesses of all sizes, Corient is redefining how financial services are delivered and accepted.
