AI in Finance: 10 Use Cases You Should Know About in 2024 The AI-powered spend management suite

In this section, we explore the patterns and trends in the literature on AI in Finance in order to obtain a compact but exhaustive account of the state of the art. Specifically, we identify some relevant bibliographic characteristics using the tools of bibliometric analysis. After that, focussing on a sub-sample of papers, we conduct a preliminary assessment of the selected studies through a content analysis and detect the main AI applications in Finance. To conduct a sound review of the literature on the selected topic, we resort to two well-known and extensively used approaches, namely bibliometric analysis and content analysis. In this study, we perform bibliometric analysis using HistCite, a popular software package developed to support researchers in elaborating and visualising the results of literature searches in the Web of Science platform. Since artificial intelligence has become more widespread across all industries, it’s no surprise that it is taking off within the world of finance, especially since COVID-19 has changed human interaction.

This transformative impact of AI in the financial industry is largely driven by a diverse set of AI technologies, which we discuss below. The world of finance is changing rapidly, with disruptive technologies and shifting consumer expectations reshaping the landscape. Yet, despite these changes, many finance tools remain stuck in the past, with a poor user experience and interface. NLP or natural language processing is the branch of AI that gives computers the ability to understand text and spoken words in much the same way human beings can. Both OCR and artificial technology play a crucial role in automating financial processes, but their applications are distinct and serve different purposes.

Its ability to provide quick, efficient, and hyper-personalized support is a game-changer for financial institutions. The resulting automation due to algorithmic trading processes saves valuable time while improving the outcome. Artificial Intelligence is certainly able to process large, complex data sets faster than humans, and this ability applied to trading highlights patterns for more strategic trades.

U.S. Bank

AI significantly increases operational efficiency in finance by streamlining processes and expediting transactions and decision-making. By automating routine tasks like data analysis and report generation, AI reduces manual effort, allowing staff to focus on strategic tasks. Financial markets are largely driven by news, events, market sentiments, and multiple economic factors. By analyzing vast historical and current data using complex models, AI systems predict future risks more accurately than conventional methods. For instance, American Express runs deep learning-based models as part of its fraud prevention strategy. Their fraud algorithms monitor every transaction around the world in real time (more than $1.2 trillion spent annually) and generate fraud decisions in milliseconds.

Individuals often seek customized financial advice based on economic trends and market conditions. Gen AI in finance provides tailored recommendations to individuals after personalized analysis of existing data, risk-taking capacity, and user behaviour. It helps users optimize investment portfolios, plan their finances strategically, and enhance customer satisfaction. Risk management and fraud detection are among AI’s most critical applications.

AI algorithms have the capacity to analyze massive amounts of data in real time. Furthermore, they can identify patterns and detect anomalies that may indicate fraudulent activities. AI plays a significant role in the banking sector, particularly in loan decision-making processes. It helps banks and financial institutions assess customers’ creditworthiness, determine appropriate credit limits, and set loan pricing based on risk. However, both decision-makers and loan applicants need clear explanations of AI-based decisions, such as reasons for application denials, to foster trust and improve customer awareness for future applications. The DataRobot firm offers AI platforms that help banks automate machine learning life cycle aspects.

As a result, VideaHealth reduces variability and ensures consistent treatment outcomes. Harvard Business School Online’s Business Insights Blog provides the career insights you need to achieve your goals and gain confidence in your business skills. Offer comprehensive AI training programs to ensure your Chat GPT staff can use the new AI tools effectively. Encourage a culture of continuous learning to keep up as the technology advances. Moreover, concerns around data privacy are not AI’s main problem as many may think. If someone wants to get information about you, it can be done without the help of AI.

Varun Saharawat is a seasoned professional in the fields of SEO and content writing. With a profound knowledge of the intricate aspects of these disciplines, Varun has established himself as a valuable asset in the world of digital marketing and online content creation. Kensho, a top AI company owned by S&P Global, uses AI to analyze tons of financial information, news, and even things like satellite images or social media posts.

Risk assessment and management is one of the best generative AI use cases in the finance industry, allowing finance businesses to evaluate credit risk for borrowers in a few seconds. Gen AI algorithms analyze customer data from different sources, including financial statements, credit history, and economic indicators, to make informed decisions regarding loan approval, credit limits, and interest rates. Another example is Digitize.AI, a Canadian startup that uses natural language processing (NLP) to quickly assess customer data analytics and provide personalized financial advice to millennials. The company has an AI-driven loan origination system that can automate the entire application process.

AI and credit risk in banks

Banks can offer tailored financial advice, customized investment portfolios, and personalized banking services. For instance, AI-driven chatbots provide real-time assistance, while machine learning models predict customer needs and suggest relevant financial products. Personalized services enhance customer satisfaction and loyalty, driving better engagement and retention. AI technologies interpret vast amounts of data, learn from them, and then make autonomous decisions or assist in decision-making processes. In finance, this often translates into applications like algorithmic trading, fraud detection, customer service enhancement, and risk management. Integrating AI into accounts payable and receivable processes has become a game-changer for accounting and finance companies.

In this way, everything related to reducing the burden on a person in routine tasks continues to evolve. As long as AI implementation gives companies competitive advantages, they will introduce new technologies as they become available. Now that we know what business value the technology proposes, it’s time to move on to discussing the strategies to manage the challenges we identified initially. At Master of Code Global, as one of the leaders in Generative AI development solutions, we have extensive expertise in deploying such projects.

• And if we look at the spend management process specifically, AI can be used to detect fraudulent invoices, duplicate payments, and expenses that breaching company policies.
• The company has more than a dozen offices around the globe serving customers in industries like banking, insurance and higher education.
• John Deere’s use of AI demonstrates how technology can radically boost efficiency.
• A study by Erik Brynjolfsson of Stanford University and Danielle Li and Lindsey Raymond of MIT tracked 5,200 customer-support agents at a Fortune 500 company who used a generative AI-based assistant.

Artificial intelligence in finance refers to the application of a set of technologies, particularly machine learning algorithms, in the finance industry. This fintech enables financial services organizations to improve the efficiency, accuracy and speed of such tasks as data analytics, forecasting, investment management, risk management, fraud detection, customer service and more. AI is modernizing the financial industry by automating traditionally manual banking processes, enabling a better understanding of financial markets and creating ways to engage customers that mimic human intelligence and interaction. Over the past two decades, artificial intelligence (AI) has experienced rapid development and is being used in a wide range of sectors and activities, including finance.

This is incredibly valuable to leadership teams because AI can prevent mistakes and bad information from propagating into reports, plans, and decision-making. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the “Deloitte” name in the United States and their respective affiliates.

This strategic use of AI ensures that financial services remain innovative and responsive to market dynamics and customer needs. AI enhances cybersecurity in financial institutions by detecting and responding to threats in real-time, thereby safeguarding sensitive data and financial assets. In fraud detection and compliance, AI identifies unusual patterns that deviate from normative behaviors to flag potential frauds and breaches early. AI-driven speech recognition is used in finance to enhance customer interaction through voice-activated banking, helping users to execute transactions or get support without manual input. By combining AI with human expertise, we can make better decisions, handle risks more effectively, and achieve better financial results.

Account Reconciliation in Commercial Banking

It is critical in optimizing financial operations and unveiling opportunities that drive boundless growth with incredible applications. Custom Gen AI model development is rigorously tested by AI service providers for different AI use cases, ensuring they perform to the notch in the real world. With iterative development, identifies issues that are addressed effectively by the team before it’s launched for the customers. We will walk you through Gen AI use cases leveraged at scale, famous real-life examples of some big companies using Gen AI in finance, and the Gen AI solutions implementation process. AI’s potential to revolutionize how businesses manage their finances has become increasingly evident as organizations adopt it more significantly. Additionally, algorithmic trading bots sometimes act erratically during market volatility, potentially leading to losses for investors if not adequately monitored by humans.

These results corroborate the fact that the above-mentioned regions are the leaders of the AI-driven financial industry, as suggested by PwC (2017). The United States, in particular, are considered the “early adopters” of AI and are likely to benefit the most from this source of competitive advantage. More lately, emerging countries in Southeast Asia and the Middle East have received growing interest. Finally, a smaller number of papers address underdeveloped regions in Africa and various economies in South America.

With the ability to automate manual processes, identify patterns and anomalies, and provide valuable insights into spending patterns, AI can help organizations streamline their financial operations and improve their bottom line. As AI technology continues to advance, it is expected that the use of artificial intelligence technologies in fraud detection will expand further, resulting in increased efficiency, accuracy, and security in the finance industry. Fraud detection is one of the key areas where AI can provide significant support to finance departments.

Finally, training teams to use these new systems effectively is no small task and requires time and resources. Business owners must communicate the benefits of AI and offer training to help employees adapt to new technologies. Accounting and finance are not typically the first industries people consider to use artificial intelligence (AI). A November 2023 Gartner survey found that 60% of finance respondents do not use AI. However, many of the AI capabilities in this market have already been used, and only small improvements still need to be made.

AI Companies Managing Financial Risk

Those companies that adopt AI early will gain first mover advantage in the industry. Whether running a small business or a large corporation, understanding how AI integrates into accounting and finance can offer a significant competitive advantage. For example, in the Rightworks inaugural 2024 Accounting Firm Technology Survey, firms that self-rated as more advanced in AI technology adoption reported up to 39% more revenue per employee. Artificial intelligence works well in narrow niches where it can replace a person in communication, such as chat rooms.

The company has more than a dozen offices around the globe serving customers in industries like banking, insurance and higher education. The following companies are just a few examples of how artificial intelligence in finance is helping banking institutions improve predictions and manage risk. By liberating finance professionals from tedious data-gathering tasks, AI allows them to dedicate more of their day to higher-value activities such as analysis, strategic planning, and decision support.

Oliver Wyman shares that using AI insights can increase annual income from email cross-sell by four times. Similarly, financial companies can capture relevant data from borrower companies’ financial documents, like annual reports and cash flow statements. With the extracted data, credit evaluation can be handled much accurately, and banks can provide faster services for lending operations. AI-driven translation tools streamline operations, enhance transparency, and support decision-making by providing timely access to multilingual data and insights. This capability is crucial in expanding market reach, boosting global partnerships, and driving innovation within the financial industry.

Following Biden’s footsteps, the European Union’s sweeping AI Act also measures floating-point operations per second, or flops, but sets the bar 10 times lower at 10 to the 25th power. China’s government has also looked at measuring computing power to determine which AI systems need safeguards. Successful pilots typically tackle small but crucial issues and demonstrate potential solutions in action.

AI in Finance FAQ

Hire AI developers to enable gen AI-powered financial report generation that is accurate and produced in less time. The finance industry and businesses are undergoing significant transformation, driven by AI, creating new opportunities for growth and reshaping service delivery and operations. A business that adopts the right tools today, will gain a sharp competitive edge in tomorrow’s race. AI has the potential to spur innovation and foster growth across various business activities such as spend management, cost and procurement optimization, minimizing waste, and predicting future spend. Generative models also simulate different outcomes for financial scenarios, such as macroeconomic events or regulatory changes impacting a company’s performance. This allows lenders and borrowers alike to understand how potential changes affect their finances.

You can foun additiona information about ai customer service and artificial intelligence and NLP. For instance, internal audit functions can be greatly enhanced by generative AI through automated analysis and reporting. For example, BloombergGPT was also evaluated in the sentiment analysis task. As a fine-tuned generative model for finance, it outperformed other models by succeeding in sentiment analysis. Financial institutions can benefit from sentiment analysis to ai in finance examples measure their brand reputation and customer satisfaction through social media posts, news articles, contact centre interactions or other sources. By leveraging its understanding of human language patterns and its ability to generate coherent, contextually relevant responses, generative AI can provide accurate and detailed answers to financial questions posed by users.

However, you’ll see that many of these use cases are applicable to other financial processes too. Much like AI algorithms do with lending or cybersecurity, machine learning algorithms can sort through large volumes of transaction data to flag suspicious activity and possible fraud. Fraud is a serious problem for banks and financial institutions, so it shouldn’t be surprising that they’re embracing new technologies to prevent it. Machine learning, which means the ability of computers to teach themselves things using pattern recognition from the data they sample, might be the best-known application of artificial intelligence.

Finally, we observe that almost all the sampled papers are quantitative, whilst only three of them are qualitative and four of them consist in literature reviews. Prioritizing cybersecurity also safeguards client assets and reinforces digital trust in financial services. Its platform finds new access points for consumer credit products like home equity lines of credit, home improvement loans and even home buy-lease offerings for retirement. Figure Marketplace uses blockchain to host a platform for investors, startups and private companies to raise capital, manage equity and trade shares. The following companies are just a few examples of how AI-infused technology is helping financial institutions make better trades.

Yokoy’s AI model uses pre-defined rules and learns from each receipt and expense report processed, getting smarter with time. OCR is a technology that is designed to recognize and https://chat.openai.com/ convert text from scanned documents or images into machine-readable text. It enables computers to “read” and understand printed or handwritten text and turn it into digital data.

AI has given the world of banking and finance new ways to meet the customer demands of smarter, safer and more convenient ways to access, spend, save and invest money. When contemplating the initial steps for integrating AI into finance operations, the decision of whether to start with the most daunting challenges or to focus on smaller, more manageable issues is not merely tactical — it’s strategic. Opting to address less significant pain points might initially seem less impactful in terms of ROI. However, these smaller victories play a pivotal role in the broader AI adoption journey.

Some candidates may qualify for scholarships or financial aid, which will be credited against the Program Fee once eligibility is determined. We expect to offer our courses in additional languages in the future but, at this time, HBS Online can only be provided in English. Imagine applying the same precision to your operations and eliminating inefficiencies, streamlining workflows, and making smarter, faster decisions. You’re not just implementing a new technology but leveraging it to bolster your organization’s productivity and give you an edge over the competition. In the healthcare industry, several companies are integrating AI into business operations.

This allows logging into payment apps and authorizing transactions with just a glance at the camera, delivering a frictionless experience far more secure than passwords/PINs. To enhance mobile security, we performed extensive security audits to ensure no application module was vulnerable to attacks. We also secured the data using different standards, such as HTTP protocols, AES-256 Encryption, and voice authorization. Going beyond optimizing front-office and back-office operations, AI in fintech can also aid marketing and sales efforts for growth and profitability.

Moreover, concerns about AI’s “black box” nature today make it challenging to explain results and instill confidence, especially for high-stakes decisions like lending approvals or insurance underwriting. While AI offers immense potential in fintech, organizations face several challenges in effectively implementing and scaling AI solutions. HSBC trained Google Cloud’s AML AI on its vast range of customer data to spot suspicious activities with more precision than manual optimization. It identifies 2-4x as much suspicious activity as its previous system while reducing the number of alerts by 60%. Renaissance Technologies is widely considered one of the most successful firms in using algorithmic trading. Their flagship fund, the Medallion Fund, has an impressive track record with average annual returns of 66% since 1988.

This technological empowerment enables banks and financial companies to explore untapped markets and tailor offerings to meet diverse customer needs more effectively. AI models can process alternative data sources like social media, mobile footprints, and browser histories to gain a comprehensive view of an individual’s financial behavior. Using techniques like neural networks, decision trees, and clustering algorithms, AI can discover highly complex patterns and interrelationships across hundreds of data dimensions correlating with credit risk.

With Tipalti AI℠, businesses can make more informed decisions based on up-to-date information about payables and spending data. AI-driven tools like chatbots and automated advisory services provide instant responses to customer inquiries, facilitating uninterrupted banking and financial advice. Artificial intelligence (AI) in finance is the use of technology, including advanced algorithms and machine learning (ML), to analyze data, automate tasks and improve decision-making in the financial services industry. The resulting sentiment is regarded either as a risk factor in asset pricing models, an input to forecast asset price direction, or an intraday stock index return (Houlihan and Creamer 2021; Renault 2017). As for predictions, daily news usually predicts stock returns for few days, whereas weekly news predicts returns for longer period, from one month to one quarter.

With multiple AI use cases and applications, assessing your business needs and objectives accurately is essential before choosing one. Comprehensive research helps outline the AI vision and create an AI strategy that will be the cornerstone of your project. As AI technologies become more prevalent in the finance industry, it’s crucial to consider the ethical implications of these tools. The use of AI technologies in finance is multiplying, with startups leading the charge on digital transformation within this sector.

Utilized by top banks in the United States, f5 provides security solutions that help financial services mitigate a variety of issues. The company offers solutions for safeguarding data, digital transformation, GRC and fraud management as well as open banking. An AI-powered search engine for the finance industry, AlphaSense serves clients like banks, investment firms and Fortune 500 companies. The platform utilizes natural language processing to analyze keyword searches within filings, transcripts, research and news to discover changes and trends in financial markets. Ayasdi creates cloud-based machine intelligence solutions for fintech businesses and organizations to understand and manage risk, anticipate the needs of customers and even aid in anti-money laundering processes. Its Sensa AML and fraud detection software runs continuous integration and deployment and analyzes its own as well as third-party data to identify and weed out false positives and detect new fraud activity.

By utilizing Gen AI, TallierLTM is set to make the systems safer and more secure for consumers worldwide. It offers a conversational interface, simplifying the extraction of complex data. Users can explore investment opportunities or evaluate competitors, receiving precise, instantly verified answers.

These methods may be restrictive as sometimes there is not a clear distinction between the two categories (Jones et al. 2017). Corporate credit ratings and social media data should be included as independent predictors in credit risk forecasts to evaluate their impact on the accuracy of risk-predicting models (Uddin et al. 2020). Moreover, it is worth evaluating the benefits of a combined human–machine approach, where analysts contribute to variables’ selection alongside data mining techniques (Jones et al. 2017). Forthcoming studies should also address black box and over-fitting biases (Sariev and Germano 2020), as well as provide solutions for the manipulation and transformation of missing input data relevant to the model (Jones et al. 2017). This research stream focuses on algorithmic trading (AT) and stock price prediction.