Almost nobody aside from a handful of smart, forward-thinking people could have seen the Industrial Revolution coming and today we as humans are facing a new revolution powered by AI that’s impacting all facets of our daily lives, including the financial industry on all fronts. This post digs into that more.
Even though AI is still a shiny object to many that may seem magical and Hollywood-esque, it has now become reality and is no longer a thing in movies. And because of that, financial institutions of all kinds ranging from hedge funds to family offices need to start thinking about AI today and perform a classic SWOT analysis to understand how such a trend is going to impact you and your clients over the next month, year, 5 years, etc.
Additionally, there’s also an element of staying ahead of the curve and knowing what’s around the next turn to always be steps ahead of your competition, and of all verticals the financial space benefits from that most. However, it also creates failures when such clarity isn’t achieved and others (firms you’re trying to crush) cease the day.
As we’ve gone down the path of implementing AI into our financial consulting practice we get a lot of questions related to the future and wanted to address some of them, which we’ve included below:
How is AI Being Used in the Finance Industry?
Today, financial institutions of all types (banks, hedge funds, family offices, etc.) are using AI in some way and it all depends on their particular goals: For example, the largest banks in the world may use AI to detect fraud while the top hedge funds use AI to discover the best opportunities.
Is AI Going to Replace Finance Jobs?
This is a very common question we are asked and though it’s valid, the reality is that Human-in-the-Loop (HITL) systems are really what power AI models today and what gives them the ability to listen, learn and become more intelligent over time. Essentially, putting feedback in the recycle bin versus the trash to become better in the future. So the answer is no, that won’t happen in the near future or for many years to come.
What is the Negative Impact of AI in Finance?
As with all innovations over time there are positives and negatives – similar to the dilemma between coal versus sustainable energy – and when looking at the financial ecosystem today there are a multitude of opportunities for financial institutions to take a step back, reevaluate the world today, then form a new course of action for the future.
This is only a snapshot of our thoughts and there’s more to come soon…