This is not a hidden secret that largest financial sector companies in the world do have huge teams for financial planning. These companies’ businesses depend upon their effective and efficient financial services.

The delivery of these financial services becomes more important when market behave in a more volatile manner and stakeholders do not want to lose their hard earned money invested with these companies. Thus, delivery of financial services becomes very crucial for any financial service providing organization specially when stakeholders are very demanding. These companies are not only required to manage finances for their customers but also are required to provide products which can help their customer in taking decisions regarding their financial planning which may include anticipating the repercussions of various investments and financing decisions, and also evaluates various alternatives. These financial advises/ decisions may affect companies present or future.

We all know that innovation has always been an important element in the financial service sector. This innovation has led to enormous growth, even though in the beginning this innovation can be accompanied by uncertainty. To bring down the transaction cost and to accelerate the delivery of financial services, technological innovation is very appropriately suited for financial service sector as companies in this sector deal in products that are not visible to customers.

Artificial intelligence is an important technological innovation. The demonstration of intelligence by technology is called as artificial intelligence (AI) which is also called as machine intelligence (Brandt, 2017). Artificial Intelligence (AI) is often used whereby machines learns the past data to recognize the trend of future data. Here the important point to remember is that the machine do not learn on their own; rather, the learning of machines require a substantial human contribution to validate that the data has been inferred in the right way.

Artificial intelligence is used in various ways in financial services sector but some of the important financial services that use artificial intelligence are being highlighted as follows: 

1. Advisory and agency services planning
2. Investment and Trading
3. Insurance
4. Communications
5. Underwriting
6. Risk Management

Advisory and agency services planning

Advise and services planning is one of the most important function of the personal financial planning. Companies are using “dashboards” which assist customers (investors) to take an overview of all of their investment portfolio and to take necessary steps accordingly. These “dashboards” also assist customers to weigh various financial products to take an informed decision regarding their investments.

On the basis of the account activity of the investor, financial companies are providing them investment advice using artificial intelligence. They are also using artificial intelligence to support customers, whereby artificial intelligence can interactively clarify the doubts that customers may have regarding their financial products or services.

Investment and Trading

Artificial intelligence also has potential uses for the optimization of investment and trading. It can identify and predict the highly profitable future investments avenue. These days, artificial intelligence is already being used by assets management companies. Some hedge funds and asset management companies are already using artificial intelligence in their investment models.

Insurance

Companies in the insurance sector can also use artificial intelligence to analyze medical conditions of individuals before and after giving health insurance. This can help companies in predicting the occurrence of a particular disease. For example, to detect whether a person is suffering from skin cancer or not, a photo at par may be helpful to decide.

Communications

Now a days, customers have become very demanding and they expect instant solutions or their queries. To overcome this problem many companies including financial sector companies are using chat bots to resolve the queries of their customers in the real time. This not only help companies in satisfying their customers 24x7 but also help in bringing down the cost.

Underwriting

Shelly (2019) has highlighted that the artificial intelligence has the potential to take underwriting from a detect-and-repair approach to a predict and-prevent approach. The use of Artificial Intelligence in Underwriting allows for a quicker, more accurate financial analysis in terms of risks and decisions for a business.

Risk Management

Artificial intelligence applications and tools are able to forecast and analyze the future risks to help financial institutions to be future ready.

Most of the time we consider Innovation as a positive progress, delivering convenience and efficiency. Artificial intelligence has increased competition by fundamentally changing the way that consumers used to purchase financial products. The notion of best practice planning in businesses is changing and will continue to change as a result of artificial intelligence.

Reference:

• Brandt, J. (2017). Artificial Intelligence Applications in Financial Markets Forecasting: A Systematic Mapping. Retrieved October 5, 2020, from AI Applications in Financial Markets Forecasting_student_2017.pdf
• Hariharan, N. K. (2018). Artificial Intelligence and human collaboration in financial planning. Retrieved October 29, 2023, from  https://www.researchgate.net/publication/354254798_Artificial_Intelligence_and_human_collaboration_in_financial_planning
• Shelly, J. (2019, May 14). Here's How Artificial Intelligence Is Poised to Transform Insurance Underwriting for the Better. Retrieved September 27, 2020, from https://riskandinsurance.com/ai-transforms-underwriting/