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From Fiction To Reality: AI & The Financial Industry

Zoe Team

Dec 20, 2022

4 min read

A financial advisor reviewing a plan with two clients at a table

Key Takeaways

AI is revolutionizing finance by boosting fraud detection, customer service, and trading efficiency.
While AI improves accuracy and decision-making, it raises concerns regarding human agency, data privacy, and ethical usage.
Robo-advisors offer automated investment management but lack the nuanced, human-centric planning provided by professional financial advisors.

Frequently Asked Questions

How is AI currently being used in the financial industry?

AI is applied in fraud detection, customer support via chatbots, real-time algorithmic trading, credit risk assessment, and investment management strategies.

Are robo-advisors a good replacement for financial advisors?

Robo-advisors provide accessible, automated investment services, but they often lack the personalized, human element and granular strategy that vetted financial advisors offer.

What are the main risks associated with AI in finance?

Key concerns include potential threats to human autonomy, data abuse, cybersecurity risks, and the need for ethical monitoring of algorithmic decision-making.

Artificial intelligence is growing exponentially, with the AI industry growing 16.4% year over year. How we operate and work is ever-evolving, and AI makes adaptations quicker. From healthcare to finance, are you aware of how your life might change due to artificial intelligence?

Artificial intelligence is growing exponentially, with the AI industry growing 16.4% year over year.

You’ve probably already seen more than one digitalized portrait of a friend or perhaps an influential person you follow. Lensa AI is an app that creates these images in various categories (i.e., anime, cartoons, and middle ages). What requires hours or days of work for artists takes this application minutes to develop. The popularity of these computer-generated portraits has sparked conversations about AI and how it’s changing different industries. From healthcare to finance, are you aware of how your life might change due to artificial intelligence?

Each Invention Opens the Door for Five Others

Artificial intelligence has continued to impress individuals and revolutionize industries. How we operate and work is ever-evolving, and AI makes adaptations quicker.

There are already various industries where these developments are making a big difference. One example is healthcare, where technological improvements are helping physicians’ accuracy and productivity. Another example is the automobile industry— think of Tesla’s driver assistant software, sparking discussions around connected, autonomous, shared, and electric (CASE) developments. Don’t be surprised if, in the near future, you can “drive” a car without a driver’s license.

The Finance Photo Generator

With all the buzz around images you no longer have to pay thousands of dollars to generate, you might question how these innovations translate into your finances.

Members of the Forbes Technology Council gathered to predict which industries will change and benefit the most from AI. As you can expect, their list included logistics, cybersecurity, healthcare, research and development, e-commerce, and financial services. Some experts believe the financial Industry’s adaptation to AI is crucial, since it will be the biggest tool for fraud prevention. Moreover, AI will continue to improve its capacity to analyze consumer behavior and identify potential opportunities.

The financial industry is beginning to recognize artificial intelligence’s potential to transform the way it does business. AI-based technologies automate and optimize financial processes, improve decision-making, and reduce costs.

Here are some examples of how AI has been adopted in the financial industry:

1. Fraud Detection:

This technology can identify abnormalities and quickly protect your accounts after any suspicion.

2. Customer Service:

Chatbots and virtual assistants might not be your favorite, but they are a big part of this automation process. These programs get closer to responding and solving inquiries as humans do each time.

3. Investment Management:

With the right software and algorithm, these developments can analyze market data and decide how to account for risk and return. From a wealth management perspective, this may allow financial advisors to become even more focused on providing genuinely personalized planning and strategy services.

4. Credit Risk Assessment:

Following up on investment management, AI can analyze financial histories and predict results. This may help individuals better manage their risk tolerance.

5. Trading:

AI algorithms can analyze market data and execute trades in real-time, improving the speed and accuracy of trades.

6. Robo-Advisors

Robo-advisors are alternatives to human financial advisors and provide investment services using mathematical algorithms. Even though they’re an automated system that improves effectiveness, they cannot operate without human interference. They are an important advancement in giving people access to financial recommendations, but they often lack the granularity and “human element” that real-life vetted advisors provide.

Does AI Pose a Threat?

There are various risks and ethical considerations that come along with artificial intelligence. A study by Pew Research Center points out experts’ eagerness toward AI’s capability of amplifying human effectiveness. However, they also discussed their concerns about how these technologies threaten human agency and autonomy.

Even though a robot might not take over your bank accounts and financial portfolio, experts worry about the involvement of AI in the financial industry and what could result in data abuse and accessibility issues. Most commonly, there are conversations about the equal playing field for investments and how to monitor AI developments. These issues are yet to be addressed, but the good news is that the future is nearer than we think, and with it come answers.

Artificial intelligence is growing exponentially, with the AI industry growing 16.4% year over year.

Each Invention Opens the Door for Five Others

Artificial intelligence has continued to impress individuals and revolutionize industries. How we operate and work is ever-evolving, and AI makes adaptations quicker.

The Finance Photo Generator

With all the buzz around images you no longer have to pay thousands of dollars to generate, you might question how these innovations translate into your finances.

Here are some examples of how AI has been adopted in the financial industry:

1. Fraud Detection:

This technology can identify abnormalities and quickly protect your accounts after any suspicion.

2. Customer Service:

Chatbots and virtual assistants might not be your favorite, but they are a big part of this automation process. These programs get closer to responding and solving inquiries as humans do each time.

3. Investment Management:

4. Credit Risk Assessment:

Following up on investment management, AI can analyze financial histories and predict results. This may help individuals better manage their risk tolerance.

5. Trading:

AI algorithms can analyze market data and execute trades in real-time, improving the speed and accuracy of trades.

6. Robo-Advisors

Does AI Pose a Threat?

Disclosures: Zoe Financial, Inc. ("Zoe Financial") is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. Zoe Financial provides investment advisory services and access to independent registered investment advisers through its platform. The information provided by Zoe Financial is for educational and informational purposes only and should not be construed as personalized investment advice or as an offer to buy or sell any security. All investments involve risk, including possible loss of principal. Past performance is not indicative of future results. Clients should consult with their own financial, tax, or legal professionals before making any investment decisions. The material presented by Zoe Financial is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product. Material presented has been gathered from sources believed to be reliable, however Adviser cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. Past performance is no guarantee of future results. Zoe Financial does not provide legal or tax advice, and nothing contained in these materials should be taken as legal or tax advice. SEC Registration does not constitute an endorsement of Zoe Financial by the SEC nor does it indicate that Zoe Financial has attained a particular level of skill or ability. The sole purpose of this material is to inform, and it in no way is intended to be an offer or solicitation to purchase or sell any security, other investment or service, or to attract any funds or deposits. Investments mentioned may not be appropriate for all clients. Before making any investment, each investor should carefully consider the risks associated with the investment, as discussed in the applicable offering memorandum, and make a determination based upon their own particular circumstances, that the investment is consistent with their investment objectives and risk tolerance. Lower expenses do not guarantee better investment performance. Certain information contained herein may constitute forward-looking statements. Due to various risks and uncertainties, actual events, results or the performance of a fund may differ materially from those reflected or contemplated in such forward-looking statements.

Disclosure: This page is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.

Investment advisory services are provided by Zoe Financial, Inc. (Zoe Financial), an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training. Learn more about Zoe Financial on the SEC’s Investment Adviser Public Disclosure website. Brokerage services are provided by Zoe Securities LLC and Apex Clearing Corporation, members of the Financial Industry Regulatory Authority Inc. (FINRA) and Securities Investor Protection Corporation (SIPC). Learn more about Zoe Securities and Apex on FINRA’s BrokerCheck website.

The information in the visuals above is for illustrative purposes only and does not represent an actual user's account, balance, or return. Zoe Financial does not provide tax or legal advice.

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