How AI Is Shaping Finance: Analytics

Artificial Intelligence (AI) is changing the way finance analytics works by opening up new possibilities and streamlining processes. These are just a few of the latest developments to keep an eye out for.
The gradsingapore Team
Brendan Yee
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There’s no denying that the finance sector has been heavily impacted by AI’s ability to transform industries. Before the introduction of these cutting edge tools, analysts used to rely on their training to interpret data through flat spreadsheets and dashboards. These days, algorithms have taken over tasks ranging from market predictions to performance evaluations, which once required a human to perform.

With new developments constantly emerging, potential candidates of this field would benefit from taking note of these new advancements in order to better understand the industry they are looking to join the finance sector.

Automate information management

Every industry has tasks that are either widely considered monotonous or repetitive by nature. Whether it's having to log thousands of hours of information into a database or keeping track of a particular segment, such jobs are an integral part of the corporate machine that allows it to keep functioning.

Usually executed by an entire department of employees, companies can now achieve the same results via AI, while also reaping benefits unique to it. For example, AI has 24-hour availability, better accuracy, and more efficiency, which are just some of the perks that firms can leverage to extract the best results when it comes to these otherwise mundane duties.

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Credit: Accenture

According to Accenture, up to 80% of fiscal transactions can be automated, which can lead to 50-60% increase in productivity through the use of automation. This means that employees have more time on their hands to work on creative or strategic projects that require a human’s touch, while employers can expect the job to be done quicker, with less mistakes and with less resources spent.

Data crunching on the fly

Once the data is logged, it needs to be processed and put through a system for review and analysis. This happens on both the consumer and organisational level, with institutions evaluating data on things like credit score, customer transaction, bank loans and much more.

Aside from external data, the amount of records that needs to be managed internally is vast as well. Revenue, payroll costs, and net income alongside client information all needs to be systematically processed and analysed in order to draw insights for future business decisions.

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Credit: Fintech News Singapore 

Despite analytic tools being around since the mid-1990s, they stayed out of reach for smaller businesses and were limited in their functions. However, with new advents like machine learning and the growing number of apps being created, everyone has both access and ability to utilise such tools to aid in data management.

Much like human intelligence, AI systems now have the capability to “learn” on the job. By crunching massive amounts of data instantaneously, the platform is able to provide a deeper and greater variety of insights to users.

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Credit: Hitachi Solutions

One example is a graphics processing unit (GPU), which is designed to do high-speed mathematical calculations. By combining it with AI protocols, users can run a more comprehensive risk mitigation review and simulate a wider scope of probabilities, compared to the traditionally used Monte Carlo tool.

Offering portfolio strategies

Beside tabulating numbers and organising data, these systems are also capable of enhancing portfolio, a task that might have required the use of other tools in the past. By harnessing insights that are driven by analytics, AI can not only provide the most optimal way to elevate a client's portfolio, but also offer real time supervision as well.

In the past, portfolio managers used to be the people responsible for a variety of duties. These included, formulating tactics to help meet the objectives of their clients, managing budget constraints and deciding on when to buy or sell. That meant that they had to maintain a basic understanding of the principles of portfolio building, and stay on top of the latest trends in order to capitalise on them.

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Credit: LeewayHertz

This undoubtedly required a lot of time and effort, particularly when it comes to interpreting the eye-watering amount of data in order to make the appropriate decision on behalf of customers. Now, however, what was once a potentially stressful job with little room for error can be made much easier and accurate with AI.

Some examples of this is the implementation of portfolio management tactics. Investors may use AI tools alongside aggressive investment tactics to find undervalued stocks, make fast trades, and predict trends in the market. On the other hand, those seeking a more conservative strategy may use these platforms to find low-risk investments and develop a fixed profile that is resilient against volatile markets to ensure slow but steady income.

Managers, at the behest of a client, can also employ discretionary and advisory methods with AI. They can either tailor tactics to meet the consumer’s needs or spot investment opportunities and propose data-driven recommendations respectively. The best part about using such systems is that they are able to run multiple functions at once, like investment distribution, allocation of assets and readjustment not only alleviate the pressure on portfolio managers, but also massively reduce the rate of inaccuracies.

AI’s influence on the financial sector

Numerous industries have experienced significant transformations due to AI, and the changes stem from the power of such systems to not only complement, but also render a person’s ability to do the same job obsolete. These platforms work faster, can handle larger workloads and produce better results than their human counterparts, making them increasingly popular across the years.

With ongoing advancements in AI technology and the swift adoption of more models, it's essential for aspiring candidates in this field to stay updated with the latest developments. This way, applicants can not only know what to expect when they enter the workforce, but aim to master relevant skills in order to ensure a smoother transition to their first job in the finance industry.