Artificial Intelligence (AI) has revolutionized financial decision-making. The world of investment banking and finance will never be the same. If you are an up-and-comer in the industry, now’s the time to look into utilizing AI for your own personal gain.
As long as you take time to study and use AI, you should be able to effectively incorporate it into your daily operations. This post will explore AI’s impact on Financial decision-making.
Table of Contents
Different Types of AI
If you are interested in using AI to make better financial decisions, the first thing you need to do is educate yourself about the different types. As can be seen on this AI finance online website, different types of AI have many different uses, ranging from allowing employers to spy on their employees to making financial decisions easier to make. Here are the two main types of AI:
Narrow AI
Narrow AI (also known as task-specific AI) is a type that is used to replicate human intelligence for dedicated purposes, like image and facial recognition for example. Some of the uses of narrow AI include:
- Image and facial recognition systems. Image and facial recognition systems, including those used by social media companies to identify individuals who are signing up for their platforms.
- Self-driving vehicles. Self-driving vehicles like Tesla, for example, utilize narrow AI. Some autonomous drones, bones, and robots also use it.
- Chatbots. Chatbots are a form of AI, with ChatGPT being the most famous of these. Google Assistant, Alexa, and Siri are also popular types of narrow AI.
- Recommendation algorithms. Recommendation algorithms are a kind of narrow AI, used to predict content that people might like to search for or view next, making their experience on the internet a lot smoother and easier.
General AI
General AI is a much more specialized, technical form of AI that has the ability to understand, learn, and use the knowledge learned for a wide range of tasks, making it the most effective form of financial decision-making. It can be used to help traders predict future changes in the finance industry, for example. Here are a few of the uses of general AI:
- Trading bots. Did you know that general AI can be used to create trading bots? Trading bots are tools that give financiers and investors the ability to predict changes in their respective markets. These tools are highly effective at predicting market trends since they use historical data to do so.
- Mathematical equations. Because general AI is more specialized, technical, and has the ability to actually learn, it can be used to answer mathematical equations and other complicated mathematical formulas. It is also used by scientists.
- Gathering data. Gathering data has never been more relevant. It’s something done by businesses, academics, and marketers. There is so much data available on the internet today that it’s impossible to gather it all alone. AI can gather data in vast quantities extremely fast, break it down, and interpret it.
- Digital marketing. Marketing is essential in modern business. It’s impossible to achieve success in business without using marketing and advertising. There are many different forms of marketing, ranging from SEO to PPC. All kinds can benefit from the use of AI in some way. Marketers also use data collection to make better decisions.
The Impact of AI on Financial Decision-Making
Data-Driven Insights
As mentioned above, AI can be used to collect massive quantities of data. It can then be used to break this data down and derive insights from it. In financial trading, data is very important. Data can help traders make more effective decisions since it can be used to go over previous trading data and make predictions about how markets are going to perform (and what changes are going to happen in the future).
Increased Automation
Automation is one of the main benefits of AI. It can be used by traders and financiers to automate annoying, repetitive tasks. Automating repetitive tasks like admin work can make their lives much easier, eliminating the need for them to spend hours each day completing this kind of work manually. It also allows companies to reduce the number of staff they have working for them, saving themselves money.
Trading Algorithms
Trading algorithms are a great way for amateur traders to make themselves money. It’s not easy to predict the outcomes of financial markets and trades. However, these algorithms, utilizing the kind of data mentioned in the first point of this section, are able to give greater insights into how trades are likely to perform, meaning businesses and independent traders are able to make better financial decisions.
Tailored Solutions
Most of the work that investment firms do is for their clients. Tailored solutions take a lot of time to generate. Financiers and investors are able to streamline their work by using AI to generate solution outlines. They feed the data they are given by their customers to AI, such as what they are looking for, how much they have to invest, and the amount of time they have, and plans can be drawn up.
Fraud Detection
Fraud has never been more of a threat to businesses than it is today. Financial institutions and investment firms are most at threat. Artificial Intelligence can be used to determine whether or not a transaction was fraudulent. It can also be incorporated into broader cybersecurity efforts to identify crime.
Customer Support
Customer support is important, especially in customer-facing businesses like most investment firms. However, it’s not cheap to staff an entire customer service desk. More and more businesses are saving themselves money by investing in AI and using that to triage and deal with customer queries. You do need to make sure that your business has dedicated support staff available just in case AI can’t deal with problems.
AI can be used for a number of reasons, including by businesses in the financial sector. Businesses within this sector are able to utilize AI technology to make better decisions. If decision-making is something you are concerned about, perhaps now’s the time to look into using AI.
