The Impact of Artificial Intelligence on Finance

The Impact of Artificial Intelligence on Finance

We’ve all heard about artificial intelligence when it comes to science fiction movies, but many people don’t realize that while it may sound futuristic, there have been significant inroads in the field within just the past few years. It’s not just in scholarly circles, either. Artificial intelligence has become a huge resource in the world of finance.

There’s Much More Data Out There:

With the emergence of the internet as a dominant force in the economy within just the past decade, more and more data is becoming available to the business and financial sector. We live in a digital world that is chock full of unorganized and scattered data. Artificial intelligence is up to the task of delivering that data in a meaningful and impactful way.

Computers Are Becoming Extremely Powerful:

This point is obvious to anyone who has a smart phone but it’s worth re-iterating when it comes to artificial intelligence and the financial world. As computers get more and more powerful, it becomes apparent that AI improves along with it. The next decade will show just how powerful AI algorithms can get.

What Can AI Actually Do Now?

It’s easy to jump in to a science fiction or fantasy mindset when talking about AI, but there are many real world applications of it available today that produce real returns. It can learn unsupervised when dealing with data clustering and statistical tools. It’s able to pick out patterns that may not be first viewable to the human mind.

It’s also capable of learning things under strict supervision. One of its benefits is hunting for specific types of data such as when it comes to credit-worthiness. It’s also capable of learning from mistakes by utilizing repetitive strategies and observing the sorts of returns they’re capable of.

Using Artificial Intelligence in Investing:

Some algorithms can be easily used to find the link between the prices on assets and different events that happen throughout the world. They can even be used to predict the movements markets make in advance based on social media. They can white list certain users in order to fight back false positives. This also makes them ideal for dealing with credit scores and other underwriting endeavors. With that being said, there are some challenges that come with utilizing artificial intelligence and plenty of room for advancements.

Dealing with Biases:

The usefulness of a particular artificially intelligent algorithm is going to be primarily based on the quality of data it’s allowed to analyze. Even with the most pristine sources, biases that may not even be known can be present and shape the findings in ways that aren’t useful. It also requires plenty of time and resources to accumulate such data sets in order to be used by the AI program. There’s also an issue with responsibility in case things go wrong.

Overall, artificial intelligence is a boon to the financial sector as long as it’s used by the right people making good, educated decisions about things.


Yorkville Advisors, LLC is a privately owned hedge fund sponsor.


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