The AI Revolution: Financial Services in the Age of Intelligent Machines

The AI Revolution: Financial Services in the Age of Intelligent Machines

Rajesh Kumar, Vishal Sharma
Copyright: © 2024 |Pages: 19
DOI: 10.4018/979-8-3693-1902-4.ch017
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Abstract

The financial services industry is undergoing a considerable transition due to the fast-paced development of artificial intelligence (AI) and allied technologies. This chapter explores the influence of AI on financial services, including its origins, fundamental ideas, and diverse applications. Credit scoring, fraud detection, customer service, investment strategies, financial education, customized banking, portfolio management, marketing strategies, and regulatory compliance are just a few areas where AI have been deployed. There are various concerns regarding the use of AI in financial services, such as issues with data security and privacy, the need for localization to serve a variety of customer bases, operationalization difficulties, the necessity for trust and transparency, the dearth of necessary skills, and the complexity of AI-driven decisions. This chapter highlights the crucial part AI will play in deciding the direction of financial services in the future and the need of preserving ethical standards to make sure AI continues to be a driver for progress in the sector.
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1. Introduction

The development of artificial intelligence (AI) applications, the number of pertinent alliances, the emergence of AI providers, the evolving complexity of corporate structures, and the desire for highly personalized services all point to a significant expansion of the AI market worldwide. The size of the worldwide artificial intelligence industry was estimated at $428 billion in 2022 and is expected to increase to $2,025.1 billion by 2030 from $515.31 billion in 2023 which shows (Compounded Annual Growth Rate) CAGR of 21.6% (Artificial Intelligence, Market Size, Share and Forecast 2023, 2023). The financial services (FS) sector, which is considered the global bellwether industry, has started on an AI-led transformation journey that includes advanced technologies like collaborative filtering, support vector machines, deep learning, automated manual tasks, robotic assistance/chatbots, and predictive modelling based on AI (Uncovering the ground truth - AI in Indian financial services, 2022).

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