If you’re keeping up with the recent developments in the finance industry, you must’ve noticed some new trends growing popular. Yes, you guessed it, we’re talking AI (Artificial Intelligence) and ML (Machine Learning) used in finance and fintech fields. But how does Machine Learning contribute to finance in general and what are the benefits companies can reap by making use of this technology in their operations? We’ve got you covered! Scroll down to explore the answers to these questions and more below.
What is Machine Learning?
Before we begin, let’s break down what Machine Learning is and how it is related to finance. Machine Learning (ML) is a pretty cool part of artificial intelligence that uses big data to find patterns and make predictions and suggestions, and it’s getting better as it goes along. The improved decision-making and efficient working offered by Machine Learning actually have the power to change the finance industry, and it’s already happening while you’re reading this. So, what are the advantages, practical applications, upcoming developments, and career opportunities in machine learning for finance?
The Exciting Ways Machine Learning Can Revolutionise Finance
Machine learning is used in finance for many things, like finding fraud, managing risk, automating tasks, analysing data, helping customers, and trading with algorithms. Machine learning is becoming more advanced in finance and is working towards achieving autonomous finance.
Technology has become a major focus for finance departments. Most companies are investing in tools like general ledger technology, financial close solutions, and workflow automation to improve their operations and more than half of the big names in finance are already using these technologies.
According to recent studies, by 2025, the entire financial close process is expected to be done automatically without any help from humans. Artificial intelligence and machine learning are quickly becoming the future of financial services.
The Advantages of Using Machine Learning in Finance
As we’ve already mentioned above, using machine learning in finance can be really helpful for a lot of reasons.
1. Reducing Human Errors
Mistakes made by humans are bound to happen in pretty much every field let alone finance. In the financial sector, even a tiny mistake made by human employees can cause a huge problem and lead to the loss of millions of dollars, affecting numerous departments in your company and sometimes, other companies that you work with. Using machine learning algorithms in finance can help significantly reduce human errors and ensure accurate data processing for a seamless operation.
2. Efficient Time and Money Saving
You know how the old adage goes: time is money. And in finance industry, that’s even more accurate than you would’ve imagined. Machine learning can save you time and provide quick solutions in real-time in the financial industry. Through machine learning, you can enhance and fasten processes and get smarter while making tough choices and precise guesses in business decisions.
As AI and ML technology is set to become more cost-effective, investing in it can be a wise decision for those in the finance sector in the long term, despite the initial and ongoing expenses.
3. Decreased Workload
As is the case with most industries dealing with numbers, finance can be challenging and at times pretty tiring for both the employer and the employees. Machine learning is a powerful and handy tool to utilise as it can handle difficult and time-consuming tasks with ease, making work easier and more efficient, leading to a lesser workload.
4. Unbiased Decision Making
As machine learning algorithms are in ways better than humans at choosing data and making decisions due to their unbiased natures, using them for your operations can lead to objective and profitable results.
While there have received some backlash as their reliability can be open to questioning, in order for machine learning to succeed in finance, it must make unbiased and transparent decisions. So any machine learning algorithms you’re planning on using, you should make sure that said algorithms are up-to-date and suitable for the finance industry.
5. Predicting the Future of Finances
Machine learning is really good at predicting financial trends. When we look at a lot of information all at once, we can figure out what might happen in the future and find good chances to invest our money.
6. Offering Expert Help to Customers
- Chatbots
Chatbots powered by machine learning can enhance customer experience and support. Chatbots can help you and your customers with all sorts of things! They can give advice on managing finances, answer questions, and even give personalised recommendations. Plus, they’re super fast! If your business has a lot of customers, this advanced customer support use case could be really helpful for your business.
- Robo-Advisors
Robo-advisors powered by machine learning help people build and take care of their investment portfolios. These cool apps use fancy maths to manage investments and make sure customers’ and companies’ money is working the way you want it to.
- Algorithmic Trading
Algorithmic trading is a cool way to trade without any bias and in less time compared to traditional methods. It helps you make better decisions while trading. By examining lots of data and market conditions, these machine learning-powered tools can find patterns and create plans to help customers make more money.
7. Discovering and Preventing Fraud
Many fintech companies currently use machine learning algorithms to catch and stop fraud. Thanks to machine learning algorithms, businesses can help detect and stop suspicious digital transactions in real time, which can prevent financial loss and predetermine possible fraudulent activities.
8. Automating Processes
Machine learning is widely adopted in finance to automate business processes and it’s one of the most effective ways to do so. By using machine learning-powered automation methods, companies can make their work easier and faster. They can even use things like chatbots and games to train their employees, and they can also automate paperwork. This helps companies to be more efficient and provide better service.
As finance companies invest more in AI, we can expect machine learning to become even more useful in the industry. This will lead to exciting new ways that AI can improve financial services. In today’s digital age, machine learning is crucial for the financial sector to keep up with the advancements in AI technology.
AI is getting smarter thanks to the vast amount of data being generated in finance. By constantly refining ML algorithms, technology is getting closer to achieving a fully automated financial future. If you haven’t started using machine learning for your finance business, you better jump on the tech bandwagon to stay up-to-date with your competition now!
