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Project Report ai in finance

BBA (Savitribai Phule Pune University)

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A
PROJECT REPORT
ON
“A STUDY ON ROLE OF ARTIFICIAL INTELLIGENCE IN

FINANCIAL SECTOR”

SUBMITTED TO

K.K.WAGH ARTS, COMMERCE, SCIENCE

AND COMPUTER SCIENCE COLLEGE, NASHIK.

IN PARTIAL FULFILLMENT OF SECOND YEAR OF

BACHELOR OF BUSINESS ADMINISTRATION
-
-: SUBMITTED BY :-

Mr. Aditya Vilas Nikumbh

[A.Y -2022 - 2023]

-: GUIDED BY :-

PROF.SHITAL INDANI

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K.K. Wagh Education Society’s

K.K.Wagh Arts, Commerce, Science & Computer Science College, Nashik.
Saraswati Nagar, Adgaon Road, Panchavati, Nashik-422003, Maharashtra
(Affiliated to Savitirbai Phule Pune University)
Accredited by NAAC: ‘B’ Grade(CGPA 2.50)
SPPU ID : PU/NS/S/71/2002 College Code : 701 A.I.S.H.E. Code : C-41802
+ 91 253- 2303100, 2303373, 2303774 [email protected] www.ascn.kkwagh.edu.in

Completion Certificate

Date:

This is to certify that Mr. Aditya Vilas Nikumbh of S.Y BBA Roll no. 47
having specialization in Financial Management has successfully completed his
project titled “A STUDY ON ROLE OF ARTIFICIAL INTELLIGENCE IN
FINANCIAL SECTOR” as per the norms of Savitribai Phule Pune Univeristy
under the guidance Prof. Supriya Daware for the academic year 2022-23.

Internal Guide External Guide HOD /Principal

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DECLARATION

I Mr. Aditya Vilas Nikumbh from S.Y BBA declare that the Project Report
entitled “A STUDY ON ROLE OF ARTIFICIAL INTELLIGENCE IN
FINANCIAL SECTOR” submitted by me for the degree of Bachelor of Business
and Administration (BBA) is the record of research carried out by me during the
semester under the guidance of Prof. Shital Indani. and has not formed the basis
for the award of any degree, diploma, associateship, fellowship, titles in this or any
other University or other institution of Higher learning. I further declare that the
material obtained from other sources has been duly acknowledged in the project
report.

Signature of the Student

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ACKNOWLEDGEMENT

The successful completion of the project would not have been possible without the
guidance and support of many people. I express my sincere gratitude for allowing
me to do my project on “A STUDY ON ROLE OF ARTIFICIAL
INTELLIGENCE IN FINANCIAL SECTOR”.

I am thankful to my internal guide Prof. Shital Indani, for her constant support
and inspiration throughout the project and invaluable suggestions, guidance and
also for providing valuable information.

Finally, I also thank all those who helped me, through their valuable guidelines,
cooperation and support during the completion of the project work.

Aditya Nikumbh

Roll no. 47 SY. BBA

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TABLE OF CONTENTS
CHAPTERS CONTENT Pg no..

1 Introduction

2 Objective of study

3 Research methodology

Theorisation
 History
 Need
4  Advantage
 Disadvantage
 Application

5 Findings and suggestion

6 Conclusion

7 Bibliography

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Chapter 1
Introduction

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A big development in technology that has everyone talking about its exciting potential is
artificial intelligence (AI). AI encompasses a variety of fields, including machine learning (ML)
and deep learning. While ML entails building models, mostly statistical models that provide
predictive results and can be developed, AI could be defined as the ability of machines to make
intelligent human-like decisions and improve over time. Many people who are not well-versed in
this field equate artificial intelligence (AI) with robots that mimic human actions and
intelligence. This is understandable given that the film industry has taken its time to persuade us
that AI refers to robots. While this is true, there is more to it thanks to sentimental analysis,
chatbots, pattern recognition, face recognition, and fingerprint recognition. Prior until now, only
major organisations with the financial means to hire highly qualified personnel could integrate
AI into software development. Since high abstraction level AI frameworks have been developed
over time, creating an intelligent system only requires a small amount of coding in one's
preferred programming language.

This Projects' major objective is to look into how AI is being used across many businesses,
particularly in the field of finance. The following research queries will be covered in this Project:

What opportunities and difficulties does AI present?

How is AI used in the banking sector?

What effects will AI have on the roles and responsibilities of the finance industry?

How will AI develop in the future?

Many contemporary smartphone models have face and fingerprint recognition capabilities and
use those as their primary security check. Additionally, AI integration has been used in the
banking system to detect fraud by identifying unusual activity and sounding the alarm.
Numerous business applications have been created today using AI to create predictive models
that may get better over time. The market forecasting models, financial and accounting models,
stock exchange prices, and, to some extent, sentimental analysis, which reveals how customers
respond to a particular product, might all be combined with the predictive models. Due to its
incorporation into the business sector, sales have increased, breaking two Amazon records to
generate over 60% of all sales. It has been a great success using chatbots instead of human

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customer service representatives to provide automated and real-time support due to the rise in
online customers from big businesses.

Many industries are using AI to perform tasks that were previously completed by people. The
financial services sector uses AI to analyse enormous amounts of data, prevent fraud by spotting
abnormal processes, engage with consumers online, among other crucial tasks. There are a lot of
really great benefit examples involving facial reconstruction, voice recognition, and ML.
Enhancing client value propositions with new technologies will increase efficiency and
effectiveness in the organization.

In the field of finance, AI tools can be quite useful because they allow for the automation of
specific jobs and an increase in analytical capacity over the outdated traditional methods. But
these also come with drawbacks despite the life-changing advantages that AI applications
provide. they also come with different limitations, which can make them not be suitable for
performing some activities, coupled with a range of risks that have to be adequately managed
appropriately.

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CONCEPT OF ARTIFICIAL INTELLIGENCE

Even though AI has been around for more than fifty years, the world we live in today offers
much greater opportunities for it. In addition to other areas of specialisation, this has encouraged
the design of a variety of its practical applications in the financial sector.

A broad phrase, AI refers to developments that provide machines "intelligent" capabilities. In

1956, John McCarthy first used the term AI. There are many other names associated with AI,
such as deep learning, machine learning, image recognition, cognitive computing, cognitive
augmentation, artificial intelligence (AI), and natural language processing (NLP). All of these
concepts are covered by AI in the present.

The goal of AI is to create an autonomous, intelligent system. ML is a subset of AI that gives

computers the ability to automatically learn and understand more without the need for explicit
programming. AI uses two different operating systems: data-based and symbolic-based. We need
to feed the machine a lot of data for the "ML" data base side before it can learn. Machine
learning is possible in many more dimensions. Patterns can be found by machines by looking at
large amounts of high-dimensional data. These models can produce forecasts that even humans
are unable to approach once they are learned.

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ARTIFICIAL INTELLIGENCE IN FINANCE

Finance is just one of several industries where artificial intelligence (AI) is transforming how
firms run. In order to analyse data, generate predictions, and take actions in response to those
analyses, AI is applied in finance.

Risk management is one of the important areas in finance where AI is being used. AI is used by
financial firms to examine historical data and identify potential dangers before they occur.
Financial organisations can effectively and efficiently manage risk because AI systems can spot
patterns and abnormalities that are challenging for humans to notice.

Fraud detection is a crucial area in finance where AI is being applied. Systems for detecting
fraud using AI can analyse a lot of data and spot irregularities that might be signs of fraud. This
aids financial organisations in reducing financial losses and stopping fraudulent transactions.

AI is also being utilised in finance to enhance customer service. Virtual assistants and chatbots
are being created to offer customers individualised and effective support. By doing simple
activities like creating new accounts, monitoring account balances, and processing transactions,
these AI-powered solutions free up customer support agents to solve more complicated
problems.

Other areas in finance where AI is making significant progress include trading and investment
analysis. Large data sets can be analysed by AI-powered systems, which can also spot trends,
patterns, and possibilities that humans would miss. As a result, traders can carry out trades more
swiftly and precisely, and investors may make better-informed investment decisions.

While using AI in finance has many advantages, there are some drawbacks as well. The
difficulty of protecting data security and privacy is one of the largest. There is a risk of data

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breaches and the misuse of personal information as more data is gathered and analysed. The
possibility for bias in decision-making is one of the ethical issues regarding the use of AI in
finance that has to be addressed.

In conclusion, the application of AI to the finance sector has the potential to revolutionise the
sector by increasing productivity, decreasing costs, and improving client experiences. To ensure
that the advantages of AI are realised without affecting data privacy, security, and ethical
considerations, it is necessary to address the issues related to its implementation and use.

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Chapter 2
Objective of study

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Objectives of Study

1. To provide an overview of the current state of AI in finance.

2. To examine the impact of AI on different aspects of finance.

3. To identify the challenges and limitations associated with the implementation of AI in finance.

4. To explore the potential benefits of AI in finance.

5. To study Advantages and disadvantages of AI in finance.

6. Identify the current and future use of AI in financial services

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Chapter 3
Research Methodology

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Primary Data

Original information gathered for a particular goal or research project is referred to as primary
data. Through techniques including surveys, interviews, experiments, and observations, this
information is collected directly from the sources. Because it is gathered especially for the
purpose of the study, primary data is often the most trustworthy and pertinent source of
information for a research project. Thiselps to ensure that the data is focused and correct.

Secondary Data

Secondary data describes information that has already been gathered by another party for a
different reason. Various sources, including government reports, research cases studies, or
professional journals, can provide this information. Secondary data can be used in research
initiatives to offer context, validate findings, or make comparisons and contrasts with primary
data.

The study methodology used in this project to examine how artificial intelligence (AI) is
affecting finance is presented in this chapter. The study used a qualitative research methodology
to investigate how various People view, experience, and feel about the usage of AI in finance.
This chapter describes the topic's research design, data gathering procedures, and data analysis
strategies.

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Research Design

This study uses an exploratory and descriptive research design. The study aims to describe the
effects of AI on the financial sector and investigate how different perceive and experience the
usage of AI in finance. The study adopted a qualitative research methodology, which entails
gathering and examining non-numerical data in order to produce insights and understanding of
the topic being studied. Because it enables the exploration of complex phenomena, captures the
perspectives of various people, and offers rich and detailed data for analysis, the qualitative
research approach was deemed appropriate for this study.

Data Collection Methods

The secondary data sources included academic literature, industry reports, and regulatory
guidelines on the use of AI in finance. These sources were used to provide background
information on the topic, identify key issues and challenges, and compare the findings of the
study with existing knowledge and research.

Data Analysis Techniques

The secondary data sources were analyzed using content analysis, which involves identifying
key themes, patterns, and trends in the data, and interpreting their implications for the research
question. The analysis of the secondary data sources was conducted using comparison of the
data.

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Limitations
The study has several limitations that may affect the generalizability and validity of the findings.
The content size of the study was limited, and the findings may not represent the views and
experiences of all people involved in the use of AI in finance. The study also relied on self-
reported data, which may be subject to biases and limitations. The study did not include a
quantitative analysis of the data, which may have provided a more robust and comprehensive
analysis of the phenomenon under investigation. Despite these limitations, the study provides
valuable insights and understanding of the impact of AI in finance and contributes to the existing
knowledge and research on the topic.

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Chapter 4
Theorisation

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History

Evolution of Artificial intelligence

The world has seen four significant revolutions that have altered its whole face. The very first
revolution happened in 1784 when the world's first steam engine was launched. The second was
when electricity was founded in 1870. The third was in 1969 when IT was introduced to the
world and the fourth is the AI revolution we're currently witnessing. The current revolutionary
age is rooted in intense automation and worldwide connectivity which requires AI.

The First Industrial Revolution utilized water and steam capacity to automate production. The
Second utilized electric capacity to make large scale manufacturing. The Third utilized
electronics and data innovation to computerize generation. Presently a Fourth Industrial
Revolution is expanding on the third, the computerized revolution that was happening from the
middle of the last century.

AI is certainly not a new innovation; its narrating roots go far back to Greek artifacts. But it was
not exactly a century back that the technological revolution began, and AI went from fiction to
entirely conceivable reality. Alan Turing, mathematician and WWII code-breaker, is generally
credited as being one of the main individuals to spring up machines that “think” in 1950. He
even invented the Turing test, which is used today, as a guideline to decide a machine's
capability to "think" as a human. Despite the fact that his thoughts were disparaged at that time,

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they set the wheels in movement, and the expression "AI" became popular in the mid-1950s after
Turing died.

Alan Turing proposed that if people utilize data and reason to resolve issues and take choices,
why can computers not do the same? Despite the fact that Turing described machines and how to
test their knowledge in his paper Computing Machinery and Intelligence in 1950, his discoveries
did not progress. The fundamental problem in development was the issue of PCs. Before any
further development could occur, machines could perform orders, yet they could not save them.
AI was in trouble in the early 1970s. Millions were invested, with little to demonstrate. The
industry's funding has been reduced, leading to the so-called AI winter. Financing was likewise
an issue up until 1974. By 1974 PCs thrived. They were presently quicker, inexpensive and ready
to store more data. During the 1980s AI study backs up with an extension of funds and
algorithmic instruments. John Hopfield and David Rumelhart promoted "deep learning" systems
which enabled PCs to acquire knowledge from experience. Then again, Edward Feigenbaum
presented master frameworks that mirrored the basic leadership procedures of a human expert. It
was not until the 2000's that many of the milestone objectives were accomplished, and AI
flourished despite of the government support and public recognition.

As the fourth industrial revolution plainly emerged in the 21st century, so did the approach of AI.
Around 2,000 new businesses worldwide now have AI as a centerpiece of their plan of action. In
the present day, AI study is continuous and keeps on developing. The Fourth Industrial
Revolution “describes the changes to the way we live, go to work and relate each other due to the
implementation of cyber-physical systems, Internet of Things and the Internet of Systems.” In
near future individuals can identify and design personalized products and facilities they demand
for industries from transport, banking, investment and insurance.

It took a few decades for individuals to perceive the genuine power of AI. High profile investors
and physicists, as Elon Musk, founder of Tesla, are proceeding with the discussion about the
potential for AI innovation. While the discussion goes to potential doomsday situations, there is
an agreement that when utilized for good, AI could fundamentally change the course of human
kind history. Furthermore, that is particularly true with regard to big data.

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Evolution of Artificial intelligence in Finance

The finance sector has been significantly impacted by artificial intelligence (AI), particularly in
the areas of trading and investment management. In the 1980s, early expert systems were
employed to assist financial analysts in making investment decisions, which marked the
beginning of the use of AI in finance.

Machine learning algorithms were created in the 1990s, enabling computers to learn from
financial data and gradually improve their performance. As a result, statistical models were
employed in the creation of quantitative investment methods to find lucrative trading
opportunities.

With the advancement of more potent processing technology and the accessibility of vast
amounts of financial data in the early 2000s, the use of AI in finance started to pick up speed.
The application of AI in high-frequency trading, where algorithms are used to analyse market
data and execute deals in a fraction of a second, is one noteworthy example of this.

Deep learning algorithms have lately been utilised to create powerful predictive models that can
analyse enormous volumes of financial data to find patterns and anticipate future market trends
with accuracy. As a result, AI-based investing methods that outperform conventional investment
techniques have been created.

In addition to investment management and trading, AI has also been used in finance for fraud
detection, credit scoring, and customer service. For example, chatbots powered by AI can be
used to provide personalized financial advice and help customers with their account inquiries.

Overall, the use of AI in finance is expected to continue to grow as financial institutions look for
new ways to improve their performance, reduce costs, and provide better service to their
customers.

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AI in the Indian Finance industry

The pandemic has accelerated the adoption of a few technologies like chatbots, computer vision
and assisted video KYC to enable efficient servicing and onboarding of customers where
corresponding offline functionalities were no longer accessible. Using this multidimensional
view tailored to the Indian Finance industry, organisations can plan their timelines, estimate
effort and prioritise the implementation of AI technologies. The customer journey
personalisation is an emerging technology whose adoption is relatively low and driven by
autonomous intelligence, while chatbots are being widely used by most financial sector
companies. That said, the opportunity for AI to contribute substantial gains in productivity and
consumption across the value chain is high, even in the case of seemingly mature technologies.
For instance, though chatbots are widely used, few financial institutions are using the data
collected by them to redefine up- and down-stream processes. Further, with the rise of AI, there
are concerns about trust and accountability. Organisations globally are considering how they can
fully realise AI’s potential while addressing the potential risks. Governments are following suit,
with emerging regulation on data privacy, accountability and explainability

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Need of Artificial Intelligence in Finance.

Artificial intelligence (AI) is being utilised more and more in the finance sector to boost
productivity, reduce expenses and improve customer service. The following are some of the
main factors for using AI in finance:

a) Risk management: AI can be used to monitor financial markets and spot potential
problems in the risk management process. Financial institutions may effectively reduce
risk and safeguard their investments through this.
b) Investment management: Using AI, complex investment strategies that outperform
conventional approaches can be created. Financial institutions may benefit from this by
increasing returns and attracting new investors.
c) Better decision-making: AI is capable of analysing large amounts of financial data to find
trends and anticipate future market developments. This enables financial organisations to
manage risk better, make smarter investment choices, and perform better overall.
d) Better customer service: AI-powered chatbots can assist clients with their account
enquiries and offer personalised financial advise. As a result, customer care workers will
have less work to do and customer happiness will rise as a result.
e) Fraud detection: AI systems are capable of identifying erroneous transactions and
warning financial organisations about possible security risks. Data about customers can
be protected and financial damages may be avoided.
f) Cost reduction: Many challenging financial procedures, such data entry and document
processing, can be automated by AI. This can save costs and free up workers to
concentrate on harder work.
g) Regulatory compliance: Financial institutions are bound by strict regulations and
reporting duties. Automating compliance procedures and ensuring that all legal criteria
are completed are both made possible by AI.

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Advantages of AI for finance

1. Better insight into financial data

AI can provide a better insight into the financial data to the finance company. It will help them to
plan a constructive approach that can benefit them and their customers.

2. Work faster

As AI works on a real-time basis, it works faster than the normal manual processes. The earlier
manual processes would take some duration to consider different aspects while taking the
decision. Automating as per the requirement can give the result and predictions in a few seconds.
Here, the complex decision can also be taken with much ease.

3. Incur lesser cost

AI implementation decreases the requirement for human experts in the work. This makes it
cheaper for doing the necessary work along with making important decisions for the
management. The company just needs to make a required algorithm that can help them to get the
desired work done easily

4. Meeting the compliance and eliminating fraud in the process

Meeting compliance as per the regulations is one of the top priorities for any financial industry.
Failing to comply with it can lead to monetary fines, a shutdown of specific operations, risk of
volatility in the process, etc. AI here can help to meet compliance and eliminate fraud in the
process. It can work as per the criteria given in the algorithm.

5. Handle large data

One of the wonderful benefits of AI to finance industry is its ability to handle large data. At a
time, it can handle large data which supersedes the manual process tremendously.

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Disadvantages of AI for finance

1. Dependence on data quality

AI algorithms rely on high-quality data to make accurate predictions. If the data is incomplete,
outdated, or inaccurate, the AI algorithm may make flawed predictions that could lead to poor
decisions.

2. Unemployment

AI can automate many of the manual processes involved in finance, which can lead to job losses
in the industry. While this can lead to cost savings, it can also have a negative impact on the
workforce.

3. Cybersecurity risks

AI algorithms can be vulnerable to cyber attacks, which can compromise the security of financial
data and put customers at risk.

4. Lack of human interaction

While AI-powered chatbots can provide personalized financial advice, some customers may
prefer to speak with a human advisor. This lack of human interaction can be a disadvantage for
some customers.

5. Cost

Developing and implementing AI technology can be expensive, which can be a barrier to

adoption for smaller financial institutions.

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Application of artificial intelligence on financial service industry

AI has been a topic for decades, and it is finally starting to impact our daily lives. AI is being
used in so many applications nowadays from language translators, face recognitions to assisting
applications such as Siri that we barely pay attention to it. Besides these applications, several
firms operating in different sectors are increasing their AI use in their systems. There is a various
factor which has contributed to the sector of finance by the use of AI. The use of AI in the
financial sector took place in various activities like chats bots and instant message replying
solving the Customer Service problem, the fraud detection by analyzing the fraud, underwriting,
Robo – advisory, prediction, regularity compliance and many more.

AI and in specific ML and deep learning can be used for financial services very efficiently. In the
following section we will explore various uses such as the avoidance of transaction fraud and the
use of AI and machine-learning technologies.

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Fraud detection and Risk Management

AI is being used to proactively screen and avoid different occasions of misrepresentation, illegal
tax avoidance, negligence and the identification of potential dangers. For example, companies
use the data and behavior of the individual to recognize patterns and detect irregular transactions.

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As part of their monetary service network, Mastercard has also been working to incorporate AI
technology in the "identification" of individuals frauds. Similar techniques have been utilized to
decide trade misconduct.

The AI system is a strong ally in evaluating real-time operations in any specified industry or
environment. It’s estimates of accuracy and comprehensive forecasts are focused on various
factors and are essential for corporate planning. The algorithms explore risks background and
recognize early indications of potential future problems. Crest Financial, a U.S. leasing
company, used AI on the Amazon Web Service platform and instantly noticed substantial
improvements in risk analysis without delays connected with conventional data science methods.

AI has solved the problem of cheating and fraud. The financial data are the most crucial factor
which the organization should protect for their customer. So, the AI can detect the fraud by
analyzing the past data and history.

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Credit Decisions

AI offers a quicker, more precise evaluation at lower costs of a prospective borrower and reflects
a broader range of variables leading to a better-informed, data-backed decision. AI's credit
scoring is based on more complicated and advanced rules opposed to traditional loan scoring
schemes. It enables lenders to differentiate between high-default risk candidates and those who
are worthy of credit but lacks a credit record history. Objectivity is a further advantage of the AI
system. Contrary to a person, a machine is unlikely to be partial. Digital banks and loan-issuing
apps use machine-learning algorithms to analyze credit status with optional information (e.g.
smartphone data) to check loan eligibility and to offer customized options.

Algorithmic Trading

Also known as “Automated Trading Systems,” has become a dominant force in financial market
worldwide. Algorithmic trading includes the use of complicated AI systems to create trading
choices at rates of more than any human being is able to do and frequently create millions of
trades in one day with no human interference. This type of trade is known as high-frequency
trading and is one of the fastest increasing financial trading area. Many banks, equity and
proprietary trading companies now have complete portfolios managed by AI systems solely.
Automated trading schemes are usually used by big corporate shareholders, but larger
proprietary companies have also traded with their own IT technologies in latest years.

Algorithmic trading utilizes high-speed and volume trading software programs depending upon a
range of pre-established requirements such as inventories rates and certain business
circumstances. One important benefit of algorithmic trading is its automation of trading and its
execution at circumstances considered optimum to purchase or sell. Since orders are put
immediately, investors can be ensured that significant opportunities are not missed. In contrast,
manual orders cannot approach the velocity of algorithmic trading. Moreover, as everything is
performed automatically by machine, the human error is almost removed from the equation. In
addition, algorithmic trading usually restricts or decreases transaction costs, enabling
shareholders to maintain even more of their earnings. Finally, algorithmic trading minimizes the
risks associated with emotion rather than the logic that shareholders are known to face.

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Chatbots

The financial and banking sectors incorporate AI-based alternatives to their present financial
issues. Big Fintech companies have a large client base and therefore require automated client
service alternatives such as chatbots. These chatbots offer immediate, real-time response; almost
64% of individuals think AI chatbots are useful because they deliver a 24-hour service that
makes company function more secure and effective. To satisfy clients ' ever changing demands,
banks have used intelligent AI alternatives to provide the highest possible user experience and to
improve their accessibility. These conversational interfaces lead to smart discussions with
millions of customers at low cost. According to the recent Research study, banks now save
around 4 mins of their representative in the handling of a request through AI chatbots, saving
billions every year in the coming years. So, companies use AI alternatives to generate value in
their financial facilities.

With the need to implement a competitive edge in technology, banks and financial firms are now
progressively beginning to embrace chatbots in their system. The impact is so much that chatbots
are now regarded as an ' industry standard. ' For businesses, chatbots are the starting point of AI.
They are primarily used for their customer service purposes as a ' virtual assistant. ' Some studies
found that millennial generation clients are very happy using the AI to remain in contact with
their bank, rather than interacting with a real person. Only 12% prefer to use the phone out of
this group, whereas many choose to chat, social media or message.

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Use cases of banking Chatbots.

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Chapter 5
Findings and Suggestions

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It is apparent that there is great potential for AI to change the financial industry after examining
the need for AI in finance and the possible benefits and drawbacks of the technology. Financial
institutions must be aware of the difficulties and take steps to create solutions that reduce the
risks if they are to achieve the potential they have.

Here are some important findings and suggestions based on the report:

1. Risks associated with cyber security are a major worry for financial organisations
utilising AI. Financial companies must spend money on cybersecurity measures to
safeguard their consumers' data.
2. Financial organisations need to be aware of how AI can affect the workforce. To make
sure that staff members are prepared to deal with AI and adjust to market developments,
they may need to reskill and upskill them.
3. The way that financial institutions use AI algorithms must be open and transparent. This
will ensure that choices are made properly and without bias and help establish confidence
with customers and regulators.
4. The effectiveness of AI algorithms depends on the quality of the data. Financial firms
must spend money on data governance and quality control procedures to guarantee the
accuracy and dependability of their algorithms.
5. Financial institutions need to make sure their AI systems are impartial. This can be
accomplished by including ethical considerations into the development process and
training algorithms on a variety of data sets.
6. Although artificial intelligence (AI) can automate many financial operations, many
clients still value human interaction. In order to serve the demands of all clients, financial
institutions should think about providing a variety of services that blend automation
powered by AI with human engagement.
7. Finally, financial institutions need to be prepared to spend money on developing and
using AI technologies. Although a considerable financial investment will be needed,
there could be tremendous rewards.

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Chapter 6
Conclusion

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In conclusion, a number of ways in which artificial intelligence (AI) has the potential to
revolutionise the financial sector. Financial companies may enhance decision-making, reduce
expenses, and enhance customer service by utilising the power of AI. Financial institutions must,
however, be aware of the difficulties and dangers posed by the technology in order to realise this
potential. They must also attempt to create solutions that reduce these dangers.

Making more accurate forecasts and choices is one of the main benefits of AI in banking.
Financial organisations can use this information to improve investment choices, identify fraud,
and cater services to individual clients. AI can also automate a lot of the manual procedures used
in finance, which can result in cost savings and increased productivity.

Nevertheless, there might be drawbacks to employing AI in banking. These include a lack of

transparency, partiality, reliance on high-quality data, loss of jobs, cybersecurity threats, a lack of
interpersonal engagement, and expense. Financial institutions must be conscious of these dangers
and try to create remedies that reduce their effects.

Financial institutions must be open about how they employ AI algorithms and make sure that
their algorithms are fair in order to ensure that AI is utilised responsibly and ethically.
Additionally, they must spend money on data governance and quality control processes in order
to safeguard both their data and their clients from online threats. In order to meet the
requirements of everyone, they should also think about providing a variety of services that blend
automation powered by AI with human engagement.

In conclusion, applying AI to finance has the potential to revolutionise the sector and benefit
both financial institutions and their clients greatly. Financial institutions must, however, be
aware of the difficulties and dangers posed by the technology and try to create solutions that
reduce these dangers. They can do this to fully realise AI's potential and set themselves up for
success in the digital age.

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Chapter 7
Bibliography

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Uncovering the ground truth AI in Indian financial services - Report by PWC

h琀琀ps://www.pwc.in/assets/pdfs/research-insights/2022/ai-adop琀椀on-in-indian-昀椀nancial-services-and-
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The Evolution of AI in Finance -BLOG

h琀琀ps://www.faulknersco琀琀.com/blog/the-evolu琀椀on-of-ai-in-昀椀nance

History of AI in Finance

h琀琀ps://analyzingalpha.com/history-of-ai-in-昀椀nance

Artificial intelligence in finance -FORBES BLOG

h琀琀ps://www.forbes.com/sites/joemckendrick/2023/02/24/ar琀椀昀椀cial-intelligence-opens-up-the-world-of-
昀椀nancial-services/?sh=5b0a5ad2b0ee

Algorithmic Trading – Investopedia

h琀琀ps://www.investopedia.com/ar琀椀cles/ac琀椀ve-trading/101014/basics-algorithmic-trading-concepts-and-
examples.asp

banking ChatBots

h琀琀ps://yellow.ai/chatbots/use-cases-of-chatbots-in-banking-industry/

Artificial Intelligence

h琀琀ps://en.wikipedia.org/wiki/Ar琀椀昀椀cial_intelligence

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