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Prompting AI to enhance securities services
Rapid adoption of technology in financial industry poses huge challenges and opportunities
The Asset 13 Sep 2023

Artificial intelligence is rapidly finding its way into the financial industry, promising to revolutionize various aspects of the business. From trading and risk management to fraud detection and customer service, AI's potential applications are vast and varied.

However, the technology has its limitations, and combining the strengths of AI with human expertise appears to offer the most promising path forward, according to Fintica AI, an AI software firm based in Tel Aviv, Israel.

“By harnessing AI's capabilities to process data, identify patterns, and automate routine tasks, financial professionals can focus on strategic decision-making and managing complex scenarios,” the company says in a commentary.

Fintica AI also underscores the need for continuous investment in research and development, data quality improvement, and regulatory alignment. “Close collaboration between technologists, finance professionals, and regulators is essential to address challenges related to bias, transparency, and accountability,” it adds.

Potential game changer

As a technology, AI could be a game changer in securities services space. For example, algorithms and machine learning models have the capacity to process vast amounts of data. In trading, this can lead to optimized decision-making and execution, reducing human error and enabling real-time adjustments to market conditions.

The technology is also useful in risk management and fraud detection. It excels at detecting anomalies and patterns that might go unnoticed by human analysts. This capability is invaluable in identifying fraudulent activities, assessing risk exposure, and ensuring compliance with regulatory frameworks.

Companies seeking to enhance its offering of personalized customer services can also employ AI-driven chatbots and virtual assistants, which have the ability to provide round-the-clock client support such as in responding to customer queries and providing tailored recommendations. This improves customer satisfaction and engagement, leading to higher client retention rates.

However, the success of AI in securities services hinges on the availability and quality of data, Fintica AI says. Biased or incomplete datasets can lead to skewed insights and decisions. Ensuring data integrity is a critical challenge that requires continuous monitoring and refining.

Moreover, the financial industry operates under strict regulatory guidelines. The use of AI introduces concerns about transparency, accountability, and the potential for algorithmic biases that could disproportionately impact certain market segments.

Human intervention

While AI can perform complex tasks, human expertise remains essential for interpreting results, refining algorithms, and making nuanced judgments. Striking the right balance between automation and human intervention is crucial, according to Fintica AI.

Financial markets are influenced by a myriad of factors, including geopolitical events and sentiment shifts. AI models built on historical data might struggle to adapt to unforeseen events, posing challenges to their reliability.

“AI holds significant promise as a game changer in securities services. Its potential to enhance efficiency, mitigate risks, and improve customer experiences is substantial. However, the hype surrounding AI should be approached with a critical lens, recognizing the challenges and limitations that exist. The successful integration of AI into securities services will require a balanced approach that leverages the strengths of both AI and human expertise while navigating regulatory and ethical considerations,” Fintica AI says.

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