Isn’t it amazing, how Artificial Intelligence (AI) is revolutionizing every sphere of life? Like, we all remember how complex the banking and investing process used to be a few decades ago. We used to wait in long queues for depositing our money and stand for 2-3 hours to understand the procedure for fixed deposits.
Share markets and other investing processes were pretty tough. Loans and credit cards used to take almost an era for approval. But AI has broken all these typical traditional drawbacks of banking and investment systems.
Nowadays we don’t have to wait for getting small things done from banks, we all carry our passbooks, checkbooks, credit cards, and debit cards in our mobiles. We can access these facilities anytime from anywhere.
Even a common man is investing its shares in share markets and crypto. AI has made these things happen. In this blog we will read about the role of AI in the investing process.
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What is Investment and what is Investment Process
Before merging the role of AI in the investing process. Let us first clear the meaning of individual terms. Investment or investing process are the financial terms related to banking and finance.
Investment is basically defined as the process of utilizing money in order to get maximum returns at the end. The owner can put money in a bank, business, land or any other precious goods or metals.
While an investment process is the guidelines that govern the working of the entire investment plan. It guards the behavior of investors and makes sure they remain faithful to the tenants. In simple words, the investment process is the list of key principles.
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Role of AI in investing process
There is no doubt that AI has evolved every single field related to humans and their process. In investment and banking facilities AI has facilitated numerous processes. This merit of the technology has not only reduced the workload from the manpower, but also has improved the accuracy in the final results.
AI improves investment banking by performing several tasks. These include customer insights, preparation of datasets, gathering of high quality of data and assisting the manpower.
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The technology reduces the burdens and complexity of the business. In return it helps in maintaining high profits and reducing the scarcity of capital.
Supported by powerful and well-structured data, AI offers faster and cheaper services to the investment giants. It assists them with innovative and new technologies so that they can look towards the coming era with confidence.
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What are the advantages of AI in the investing process?
AI is the future of investing systems. Due to its advance and modern technologies it has solved many problems related to the field. The major advantages of artificial intelligence in the investing process are as follows:
1. Reduction in operational costs
The investment process is fully equipped with intermediate operations. Though the entire process is quite digital, it still employs several human based processes. It involves paperwork, due to which operational costs shoot high. But AI and RPA, helps in reducing these Logistics and operational costs.
2. Robotic process automation
RPA or robotic process automation is basically a software that mimics the rules and tasks performed by humans. This helps the investment system to eliminate the human process of time intensive and error prone work.
3. Assist the manpower
AI and its technology assists the manpower employed in the network. This helps in making the entire investment process quite simple and easier. From gathering the customer's data from different contracts, forms and other resources to calculating the interest rates and profit margins, AI has improved and assisted a lot of processes.
4. Improved handwriting recognition
NLP and other AI technologies assist RPA bots with improved handwriting recognition. This feature has already transferred a variety of workflow to the machines which was previously handled by the humans.
5. Improve customer experience
AI helps in improving customer satisfaction. There are several ways in which AI is playing its part. Chatbots are another advantage of AI. Rather than waiting in a long queue so that customer care service can connect you, chatbots give immediate attention to the customers and thus helps in optimizing their experience and creating insights.
6. Fraud detection
The AI algorithms help in detection of fraud and errors. Most of the time quicker than the manpower. The complex algorithms can analyze the bundle of data and detect suspicious transactions from it. This helps in preventing financial losses.
7. Increase the availability of banks and the system
With applications such as and e-banking systems, customers can access the investment facilities even on holidays and weekends.
8. Automate decision making
AI helps in the automation of investing decisions. Some investing firms like Switzerland-based UBS have already employed their algorithmic trading systems. These smart systems help in making investment research and decisions.
Few financial companies have employed robo-advisors for their services. These advisers assist the customers with portfolio management and provide high-quality guidance to them while making decisions.
10. Improved loan and credit decisioning
AI systems help in making safer and profitable loan and credit decisions. AI helps in studying credit scores, credit history, banking transactions, and customer references. These loan decision systems and ML algorithms analyze the patterns and behaviors to determine the customer needs.
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Limitations of AI in investing process
The drawbacks of AI in investing process are as follows:
1. High costs
The advanced and premium technologies of AI are quite expensive. Many organizations cannot afford them, especially the minor and small scale ones.
2. Risk to human employment
The way machines are replacing manpower and humans, there is a risk to human employment. Even the renowned experts from different fields have issued the same warning about this.
3. Complex algorithms
The AI employs complex ML and NLP algorithms for decision making, which are extensively hard for common man to understand and process.
4. Lack of regulatory scrutiny
There is a lack of regulatory scrutiny in AI. The fields lack rules and regulations thus increasing the risk of cybercrime. The technologies and machines may cause the risk to personal information of customers.
AI and its technologies use data of the individuals to drive results. Sometimes this data is misused and results in colossal losses. We all often hear about cases of bank fraud in the news every day.
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AI is a boon as well as a bane to mankind. Though many steps have been taken by the government and authorities to cover its limitations. Such as the appearance of GDPR, to control cybercrime related activities.
But still, the technology needs to be embedded with ethics and more control. This would not only make the entire concept more convenient but even trustworthy for the general public.