27/01/2024
How is AI changing traditional financial decision-making processes, and what lies ahead at the intersection of technology and finance? This question reflects the quest to explore the role of AI in contemporary finance practices. In the financial industry, making an investment and managing the risk of that investment is the most difficult job. One needs to make informed decisions every day. As humans are err, there are chances of mistakes, and mistakes can lead to huge losses. Here lies the role of AI; with its research and algorithmic tools, one can make informed decisions.
In today's technological arena, artificial intelligence is the most widely used term. In simple words, it refers to the computer and machine learning programs that help in performing different tasks that historically required human ability or intelligence. If we separate AI, then there are two categories: general AI and narrow AI. Both categories of AI are specialized in particular tasks. For example, reading images is the job of narrow AI, and creating artificial brains is the job of general AI.
When we talk about financial services, there is a risk of fraudulent activities, scams, money laundering, illegal activity in finances, etc. So, to minimize these risks, this sector heavily depends on technology. With the advent of chatbots, fraud detection software, and self-driven machines, customer experiences have improved, the risks of fraud have reduced, and trust in machines has developed. AI and its features have changed the way financial institutions used to work before.
If I call AI a revolutionary idea, then it would not be wrong to say so. AI has the potential to provide insights about the market that human intelligence can miss. It is not an easy job for a human to analyze a vast amount of data and generate winning insights without taking rest, but for an AI, it is. Because it analyzes huge amounts of data with the help of machine learning algorithms. Though there are many benefits to using AI in financial decision-making, the main decision is making predictions based on historical data. The machine learning algorithms can help one identify patterns and trends in financial markets, thus allowing investors and traders to make more informed decisions.
Further to this, AI may never get tired due to the huge work that many humans do. It works around the clock. It is helpful for financial institutes to work 24/7 for better customer service. And it can help them make faster and more accurate transactions.
It requires speed in technology to tackle the market conditions and manage the risk. Let's share with you this experience of mine with trading. I'm a trader at Binance. Binance is the most used and trusted platform in cryptocurrency trading. I used to trade without the help of artificial intelligence. I mainly depended on human ability and true guesses in trading. I failed to protect myself from the huge dump in prices due to the news that India banned crypto exchanges. My profitable investments turned into a loss. It taught me the lesson of not totally relying on guesses. If I had used AI instead, I would have had a positive ROI. So, to tackle these market conditions, AI's speed can help you monitor risk.
Conclusively, in the fast-moving world, one needs to have cutting-edge technology to gain a competitive advantage. In financial markets, informed decisions are very important to making profits. So, AI plays a major role in shaping the futuristic outlook of financial markets based on contemporary practices.
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