EthicsAccountabilityTransparencycs.AI
Redefining Finance: The Influence of Artificial Intelligence (AI) and Machine Learning (ML)
Animesh Kumar
October 21, 2024
arXiv.org
6 citations
1 influential
Key Takeaways
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AI is transforming core banking operations across multiple sectors: Financial institutions are deploying AI and ML across retail banking, wealth management, corporate banking, and payment systems—from customer onboarding to fraud detection—fundamentally changing how banking has operated for decades.
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Efficiency and personalization are key drivers of AI adoption: Banks are using advanced predictive analytics and automation to improve operational efficiency, deliver personalized customer experiences, and minimize risk through enhanced fraud detection techniques.
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Ethical and regulatory governance must keep pace with technology: The paper emphasizes that as financial institutions rapidly integrate AI and ML into mainstream applications, they must simultaneously establish "robust governance frameworks and responsible AI practices" to address the ethical and regulatory challenges these technologies create.
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Risk mitigation remains a central concern: While automation and data-driven decision-making offer benefits, financial institutions are balancing their appetite for AI adoption with the need to mitigate risks—suggesting that responsible implementation requires careful oversight alongside innovation.
Abstract
With rapid transformation of technologies, the fusion of Artificial Intelligence (AI) and Machine Learning (ML) in finance is disrupting the entire ecosystem and operations which were followed for decades. The current landscape is where decisions are increasingly data-driven by financial institutions with an appetite for automation while mitigating risks. The segments of financial institutions which are getting heavily influenced are retail banking, wealth management, corporate banking & payment ecosystem. The solution ranges from onboarding the customers all the way fraud detection & prevention to enhancing the customer services. Financial Institutes are leap frogging with integration of Artificial Intelligence and Machine Learning in mainstream applications and enhancing operational efficiency through advanced predictive analytics, extending personalized customer experiences, and automation to minimize risk with fraud detection techniques. However, with Adoption of AI & ML, it is imperative that the financial institute also needs to address ethical and regulatory challenges, by putting in place robust governance frameworks and responsible AI practices.