What Are Some Examples of How AI Is Impacting Financial Services?
The strengths of AI are a good match for the challenges facing financial services firms around the world. AI has generated a lot of excitement and attention in recent years because of its huge potential to add value to all kinds of financial services transactions. Banks and investment firms are exploring the power of AI to improve customer experience, automate cumbersome tasks, cut costs, and help uncover new opportunities for future growth.
For example, the ability of AI to detect and analyze patterns in big data makes it a powerful tool for wealth management and investments. One of the key ways we’re seeing this partnership today is via AI-powered “roboadvisors” that are taking on many aspects of financial portfolio management for clients.
Companies like Betterment that use a combination of human and AI expertise are leading the charge in this growing trend. The company helps customers set up a portfolio, choose, and maintain investments for a fixed annual fee. Betterment’s approach has gained popularity in recent years and the company currently oversees more than $10 billion in assets for over 250,000 customers.
And for those of us who are concerned with the security of our personal bank accounts and assets, we can expect more sophisticated, AI-powered fraud protection in the future. And for those of us who have endured cumbersome and unhelpful phone support from our banks, we can look forward to advances in AI service bots that promise to be much more efficient at problem-solving and providing quick responses.
What Are the Risks and Benefits Associated with AI?
“People are really too focused on ‘evil AI,’ and not focused enough on human intent.“
There is a popular argument that tools like AI essentially are neutral, and can be used for good or evil, depending on the user’s intentions. While AI is unique in that we’re building it to be capable of developing its own learning and “intentions,” it’s realistic to expect that for the foreseeable future, AI will be shaped by the direction of its human creators.
We can say with certainty that AI is such a profound tool that its impact marks a true global paradigm shift, similar to the revolutions brought about by the development of agriculture, writing, and manufacturing.
While the future changes that AI will bring are almost impossible to imagine, we have identified three key benefits and three key risks worth keeping in mind:
Risks of AI
- Drastic changes to our lives
- AI created with bad intention
- AI created with good intention goes bad
Benefits of AI
- Increased efficiency
- Solving problems for humanity
- Liberate humans to do what they do best
What Are the Benefits of AI, in Greater Detail?
In an ideal world, AI represents a win-win scenario by providing strengths that humans don’t possess. Advanced pattern recognition, computing speed, and nonstop productivity courtesy of AI allow humans to increase efficiency and offload mundane tasks—and potentially solve problems that have evaded human insight for thousands of years. Let’s look at some benefits of AI in more detail.
AI offers increased efficiency
We are human, and so we make mistakes and get tired. We can only perform competent work for a limited time before fatigue takes over and our focus and accuracy deteriorate. We require time to unplug, unwind, and sleep.
AIs have no biological body, side-gig, or family to pull their attention away from work. And while humans struggle to keep focus after a while, AIs stay as accurate whether they work one hour or 1,000 hours. While they work, these AIs can also be accurately recording data that will, in turn, provide more fuel for their own learning and pattern recognition.
For this reason, AI is transforming every industry. The amount of time and energy companies have to invest in repetitive manual work will diminish exponentially, freeing up time and money, which in turn allows for more research and more breakthroughs for each industry.
AI is solving problems for humanity
As AIs gain greater capabilities and are deployed in different capacities, we can expect to see many of the problems that have plagued government, schools, and corporations to be solved. AIs will also be able to help improve our justice system, healthcare, social issues, economy, governance, and other aspects of our society.
These critical systems are rife with challenges, bottlenecks, and outright failures. In each realm, human bureaucracy and unpredictability seem to slow down and sometimes even break the system. When AIs gain traction in these important domains, we can expect much more rational, fair, and thorough examinations of data, and improved policy decisions should soon follow.
AI is liberating humans to do what they do best
As AIs become more mainstream and take over mundane and menial tasks, humans will be freed up to do what they do best—to think critically and creatively and to imagine new possibilities. It’s likely this critical thought and creativity will be augmented and improved by AI tools. In the future, more emphasis will be placed on co-working situations in which tasks are divided between humans and AIs, according to their abilities and strengths.
Perhaps the most important task humans will focus on is creating meaningful relationships and connections. As AIs manage more and more technical tasks, we may see a higher value placed on uniquely human traits like kindness, compassion, empathy, and understanding.
What Are the Risks of AI, in Greater Detail?
Will AI change our current way of life? Absolutely. Do we know exactly how? Absolutely not.
AI already is affecting nearly every aspect of our personal and professional lives. Every human institution—businesses, governments, academia, and non-profits—is already experiencing the accelerating pace of change. And although AI is often portrayed in terms of solutions to solve problems in healthcare, transportation, and business productivity, there is also a darker side to consider.
There are concerns that AI will replace human workers, and some people fear the ultimate outcome will be that superintelligent AI-powered machines will eventually replace humans entirely. While this is a possibility, many experts believe that it’s more likely that AIs will enhance, not replace, humanity and that eventually, we might merge with AIs.
It’s essential to think about what might happen when a tool as powerful as AI malfunctions or is used with malicious intent. Consider the following two scenarios:
Scenario 1: AI created with bad intentions
Those who insist that technology is neutral will point out that a hammer can be used to build a home or to hit someone over the head. As with any technology in the wrong hands, AI could be created to help humans commit horrible acts. This might be an autonomous weapon programmed by the military, or a malevolent algorithm set loose by an individual hacker.
Fear associated with AI—a technology that is intelligent and capable of self-learning—is not unfounded. But it’s important to remember that humans also are highly intelligent and capable of rapid learning and improvement.
Moreover, it’s also worth remembering that harmful AI capabilities aren’t created in a vacuum. While one person or group is attempting to create something harmful, there is often an equal or greater amount of energy being invested to stop that harm and create countermeasures that limit risk and impact.
Scenario 2: AI created with good intentions goes bad
Another scenario is the runaway AI, in which a machine that was built with good intentions turns bad—a staple of classic Sci-Fi films like “Blade Runner” and “2001 Space Odyssey.” Indeed, when the sentient computer HAL turned against astronauts in the 1968 Stanley Kubrick film, many viewers found the premise to be unrealistic. With the widespread use of AI, as well as its growing capabilities, this scenario may no longer seem as far-fetched.
Addressing concerns over whether AI will drive massive job displacement, Singularity University Co-Founder and Chancellor Ray Kurzweil explains that while certain jobs will be lost, new jobs and careers will be created as we build new capabilities.
Kurzweil notes that AI will benefit humans and that AI is less likely to be threatening than beneficial to us, and it benefits us in many ways already. In Kurzweil’s view, a robot takeover is less likely than a co-existence, where machines reinforce human abilities and accelerate our progress.