How does AI work?
Understand some of the potential ethical issues AI poses for financial services institutions and what technology leaders have agreed to provide as safeguards.
Artificial Intelligence (AI) has become one of the most talked about technologies these days, and for good reason: as the technology matures, it is finding application across the entire spectrum of human endeavors, from science to art…even financial services.
AI emulates human decision-making by consuming vast amounts of data and applying algorithms that arrive at an appropriate decision based on past good and bad decisions. The algorithm is tested by applying new data and measuring the machine’s responses.
Over time, the model “learns” the difference between a good decision from a bad decision based on the algorithm and live human interaction, offering feedback about the quality of its decisions. At the same time, AI designers are constantly adjusting the learning algorithms and models to ensure optimal responses.
AI is currently being used in a number of financial services applications, including managing asset allocations, assessing portfolio risk, qualifying loan applications, and automated chatbots that recommend services based on client needs. The benefits of AI promise to help financial services companies reduce costs, maximize client portfolio values, and accurately assess the creditworthiness of loan applicants.
There are significant benefits to employing AI within financial services such as:
- personalized customer experience,
- risk management and fraud detection,
- enhanced data analysis, and
- operational efficiency and cost reduction.
But with great power comes great responsibility.