AI in Financial Services: Where We Stand Right Now

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AI in Financial Services

Things move quickly in the world of artificial intelligence (AI), and since our AI article in the April Barnum Report, there has been more discussion about the pros and cons of AI. Many businesses, organizations and governments are going full speed ahead in using AI, and indeed cannot afford not to in a competitive world. Still, some of the pioneers in the AI field who do see a bright future for AI are reminding us of the need for caution.

Words of Caution

Geoffrey Hinton, who has been called the “Godfather of Artificial Intelligence,” retired from Google earlier this year. In a recent interview with CBS News, Hinton said he believes AI has the potential for good and harm. Now is the moment to run experiments to understand AI and pass laws to ensure the technology is ethically used, he added.

“It may be we look back and see this as a kind of turning point when humanity had to make the decision about whether to develop these things further and what to do to protect themselves if they did,” Hinton said. “I don’t know. My main message is there’s enormous uncertainty about what is going to happen next. These things do understand. And because they understand, we need to think hard about what’s going to happen next. And we just don’t know.” AI has the potential to one day take over from humanity, Hinton warned.

The Pros

But what about the pros? Below are a few examples according to Tech Target:

  • Newer model cars use AI-enabled systems to ensure safety on the road by monitoring blind spots, alerting drivers when their attention wanes and taking preventative measures such as braking automatically to avoid crashes.
  • Swiss researchers announced in spring 2023 that they used AI as part of a medical treatment plan to help a paralyzed man walk for the first time in 12 years.
  • During the COVID-19 pandemic researchers created an AI model to help them predict which COVID variants would become dominant, as well as when and where surges in cases would occur.
  • The mayor of New York is using AI to speak in various languages to the citizens of this multilingual metropolis.

AI in Financial Services

While many companies have been slow to adopt the technology, due in part to steep implementation costs, “AI and deep learning are rapidly appearing in the financial service industry. Financial advisors and RIAs, who have already been buffeted by industry changes, are at great risk of being left behind if they forgo this new innovation,” according to Roger Wohlner, a well-known business writer and financial advisor. “Most of the AI used now is among Wall Street professionals, but industry analysts predict it will soon make its way to the retail financial advisory space,” he adds.

Various industry studies predict that the amount managed by robo-advisors will continue to grow at a torrid pace. At one point, many even predicted that robo services would drastically reduce or eliminate the need for traditional advisors. However, that has not been the case, as giants like Vanguard offer their clients a combination of robo technology and human advice, and this has proven to be widely successful.

Always Evolving

One of the most important facts to remember is that the technology and understand surrounding AI is rapidly evolving. The information we know now will certainly change in the coming weeks, months, and years. There are always pros and cons to new technology, but with artificial intelligence, the focus on those competing ideas seems to be ratcheted up. For now, we must keep tabs on the progress AI makes in the world, and especially in our industry.

To learn more, contact your Barnum representative today. Don’t have one? Click to get a complimentary financial assessment.

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