AI, large language models and machine learning have disrupted the financial industry for over a decade. What began small with simple routines has now expanded possible applications to more complex and precise use cases. The ability to read, process and analyze vast amounts of historical data and news revolutionizes how AI can enhance client satisfaction and make more informed decisions in finance.

Trading algorithms

Trading systems and automated trading have a long history in trading. Be it in the form of codeable trading strategies, API connections between trading platforms, brokers and stock exchanges or trade automation. What had to be done manually in the past can now be automatically processed by using generative AI. Highly effective AI stock trading software evaluates trading signals based on algorithmically evaluated strategies.

The AI processes and analyzes the entire history of equity to identify the trading pattern that worked best in the past, considering that future gains will be similar to past performance. The AI also automatically routs the buy and sell orders via an online broker to the stock exchange, where it has the best chance to be filled at the best possible price.

Robo advisory

Robo Advisors use artificial intelligence-empowered strategies to minimize risk and actively seek above-average returns by identifying smart investment strategies. Those investment strategies are tailored to defined investment themes and risk levels clients can choose from.

The AI determines which asset to allocate in what investment theme, takes care of buying and selling initial assets, and ensures proper rebalancing of the robo advisor portfolio.

AI-based robo advisor algorithms take over the work from asset managers by automatically identifying the best-possible investment strategies by considering essential factors such as investment horizons, expected returns and risk tolerance to come up with individual investment strategies clients can choose from.

Wealth management

Financial advisory in the form of robo advisors is just one use case of AI in wealth management. AI helps wealth managing firms to optimize customer interactions with automated chatbots. What began as simple chatbot routines answering only basic questions, routing most users to human help desk workers is now a highly optimized AI-based process. Natural language processing models (NLP) help chatbot systems to better understand requests and generate better answers.

AI technology offers increased accuracy and efficiency and opens the doors to enormous potential and versatility within wealth management processes. AI has game-changing influences in wealth management, with impactful outcomes to be expected.

Financial planning

AI-based algorithms can read finance documents such as insurance policies and tax return statements and instantly summarize the analyzed data to identify relevant financial planning key insights. Potential use cases in financial planning are estate tax reductions, Roth conversion savings and tax scenario planning, mortgages, student debt and medical insurance.

Financial advisors can use AI-based financial planning tools to take a proactive role by providing tax planning scenarios to their clients much faster. The AI reads the client data within a few minutes and summarizes it quickly to develop recommendations for tax optimization and tax-saving opportunities.

Financial reporting

Using AI for financial reporting helps automate processes, improve compliance and quality, enhance data analysis and increase security. Organizations that utilize the power of AI for financial reporting have a clear advantage over competitors. As with the rise of the internet, it’s not longer the question of whether AI is reasonable but when to start using AI.

Financial reporting in big corporations is labor-intensive and time-consuming, making it expensive and a great application of AI to streamline processes and save money. Financial statement analysis and financial forecasting are two of the most compelling examples of where AI can unfold its benefits.

Data analysis

Artificial intelligence is used to enhance reading, cleaning, reshapening and newly modeling unstructured data to well-structured data to identify valuable information. Thanks to AI, data processing is much faster, and the volume of processed data is more meaningful than pre-AI data analysis.

Companies using AI for data analysis begin by collecting datasets from trusted sources. The AI then takes care of removing irrelevant information from the raw data and extracting the data to focus on during data analysis. The data analysis looks at the data to identify valuable insights before the final step of data interpretation, which helps to make the right decisions based on the analyzed data.

Risk management

AI, machine learning and trained algorithms can be used to accurately estimate the creditworthiness of clients by analyzing credit history and income growth of a client, but also considering market conditions. Banks also use big data analytics to combine internal data from customers with additional external data to gain a unique view of risk.

Another part of corporate risk management is automation, which helps reduce risk and the chances of manual errors, reducing risk and operational efficiency.

LeackStat 2023