Artificial intelligence, AI, has been developing for over five decades. Its development has gained more traction in the last five years than the rest of the years combined. Advancements in cloud computing, machine processing speeds, big data and open source software have been the key catalysts. The technology is a promising solution to some crucial trading problems which include accounting, fraud, and algorithm analysis.
1. Automated Accounting
Accounting in business is just as labour intensive as it is error sensitive. Using AI in the financial industry will automate the entire process. Think of an accounting machine that analyses the business process and immediately creates invoices. It then uses the data to generate revenue information and transfer the same to a financial system. The entire process would take only seconds.
2. Fraud Detection
Online fraud has become a significant problem in the world of e-commerce. A 2015 study by Javelin Strategy showed that retailers had lost nearly $120 billion due to false declines rejections. As a result, using AI in the finance industry as a fraud detection and prevention strategy is gaining popularity. A noteworthy example is MasterCard's Decision Intelligence Technology.
3. Stock Trading Analysis
Accurate and speedy analysis of complex and large numbers is an apparent advantage of AI. Machine Learning has made it possible for applications to understand and process complex data and algorithms like the ones in stock trading. Sentient Technologies and Numerai are some of the hedge funds that have begun exploring this option. The models of trading they have developed so far put them ahead of their competition.
Artificial intelligence is still a developing technology with numerous hurdles to overcome. However, the prospect for faster accounting, safer, and better trading makes using AI in the financial industry a worthwhile investment.