Future AI Applications in the Financial Services Sector

Future AI Applications in the Financial Services Sector

It is estimated that the financial services industry would double its spending on AI by 2027 with the sales of AI systems expected to increase 29 per cent annually.68 The future of AI in the financial services industry can totally redefine the industry in terms of the key stakeholders, their roles and their engagements. Let us examine some of these dimensions next.

AI-Driven Decentralised Finance (DeFi) Systems

The implementation of DeFi, which operates on blockchain technology, could have far-reaching implications for the financial services industry, including removal of intermediaries like banks and brokers, enabling direct peer-to-peer financial transactions. As a result, AI algorithms could facilitate real-time automated portfolio management, smart contracts, and automatic detection of potential frauds and manipulation.69

AI for Predictive Financial Health Monitoring

Financial institutions would be able to offer proactive solutions for customers who are likely to face financial difficulties by alerting them in advance. AI-driven systems would be able to report risk trends by monitoring the customer’s financial status, behaviour and mental status continually and propose suitable options to invest/divest.70

AI-Supported Integrated Financial Views

AI could help create an integrated view of financial scenarios across different industries or ecosystems, thus making the finance management process seamless for customers. This could lead to design of financial products cutting across different sectors, integration of data from multiple sources, namely, retail, health, credit scores and so on and connection of all investments across insurance, banks, stocks and so on to get an integrated view.71

AI-Powered Quantum Computing in Finance

Quantum computing is yet to unleash its full potential and is expected to emerge as an important force multiplier on AI soon. This would lead to higher levels of precision and accuracy in risk modelling, portfolio optimisation and market trends due to which decision-making with respect to investments, trading and interest rates would become far superior.72

AI-Driven Financial Sovereignty and Digital Identity

Consumers would be able to control their digital identities and financial sovereignty with the help of AI in future. Blockchain would enable individuals to protect their personal data, and financial institutions could use AI to authenticate and verify the identities. The scope of digital wallets would expand and go beyond payments and offer verification and asset tracking in a secure and decentralised manner.