AI in Finance: Current & Future Applications

Technology is everywhere today, from online shopping to mobile payments. In the same way, AI in finance is changing how we save, spend, and manage money.

Artificial Intelligence (AI) simply means teaching machines to "think" and learn like humans. In finance, this means spotting unusual activity, predicting risks, and even giving personal financial suggestions. Tasks that once took hours of human effort can now be done in seconds.

How AI is Used in Finance Today

AI is already part of the financial system. Some examples are easy to notice, while others work in the background.

1. Detecting Fraud and Securing Accounts

Fraud is a major problem in banking. AI in finance can track thousands of transactions instantly and spot anything suspicious.

Example: If your debit card is suddenly used in another country within minutes of being swiped at your local store, AI systems can flag it and freeze the card to prevent misuse.

2. Answering Customer Questions

Banks often use chatbots powered by AI to provide round-the-clock support.

Example: When you type "How do I reset my password?" in your banking app, a chatbot gives you step-by-step instructions within seconds, instead of waiting on a long phone call.

3. Making Loan Decisions

Earlier, getting a loan approval involved long paperwork and manual checks. Now, AI in banking and finance helps speed up the process.

Example: A young professional applying for a car loan can get an instant decision because AI reviews their income, repayment history, and spending habits all at once.

4. Personalised Financial Tips

AI-powered apps can study your spending and suggest better ways to save.

Example: If you spend ₹5,000 monthly on food delivery, an app might show how reducing this by just 20% could save you ₹12,000 in a year.

5. Trading in Stock Markets

One of the most powerful uses of AI in finance is in stock market trading.

Example: If a company announces its quarterly results, AI can immediately scan the report, track news updates, and suggest trades much faster than a human analyst. This quick response has had a noticeable impact of AI on financial markets.

Why AI in Finance is Helpful

The advantages are clear and can be seen in daily situations:

• Faster decisions: Instant loan approvals compared to the earlier wait of several days.
• Fewer mistakes: Machines reduce human errors when checking large amounts of data.
• More safety: AI can block a suspicious online purchase before money leaves your account.
• Better service: Customers can get answers in seconds through chatbots.
• Smarter insights: AI tools for financial analysis can predict risks like possible loan defaults.

Challenges in Using AI

Like every technology, AI also faces issues:

• Data privacy: Your bank records, income details, and card transactions are private, so protecting them is critical.
• Bias risks: If AI systems are trained on limited data, they might favour certain applicants unfairly — for example, approving loans more often for one group than another.
• Rules and laws: Governments and regulators are still creating proper guidelines for safe use.
• Human judgement: Important money matters still need people. For instance, an AI may suggest rejecting a loan, but a human banker may see special circumstances and approve it.

The Future of AI in Finance

The future of AI in finance is full of new possibilities:

• Smarter robo-advisors: These digital tools will soon act more like human financial planners. Example: They could remind you that your holiday spending is going above budget and suggest adjusting your savings plan.
• AI and blockchain together: This could make payments more secure by combining two powerful technologies. Example: Using AI to spot fake transactions in cryptocurrency markets.
• Predicting risks: AI will be able to forecast economic changes more accurately. Example: Helping businesses prepare for inflation by predicting rising costs earlier.
• Reaching rural areas: AI can bring banking to places with no branches. Example: Using mobile data or utility bill payments to assess whether a farmer in a remote village qualifies for a small loan.

Conclusion

AI in finance is no longer just a buzzword. It is already protecting accounts, speeding up loans, and giving people personalised advice. It makes financial systems faster, safer, and more user-friendly.

But challenges like data privacy and fairness remind us that AI should work with humans, not replace them. The real goal is to make finance more secure and accessible for everyone. At Indiabulls Securities Limited (formerly known as Dhani Stocks Limited), our focus remains on giving people the knowledge and resources they need to understand and navigate this fast-changing financial world.

FAQs

1. Can AI make banking more inclusive?

Yes, AI can use data like phone usage or utility bills to assess creditworthiness, making it easier for people in rural areas to access loans or accounts.

2. Will AI reduce jobs in finance?

AI may handle repetitive tasks, but human judgement and customer trust remain essential, so financial professionals will continue to play a key role.

3. How is AI different from regular financial software?

Regular software follows fixed rules, while AI can learn and improve over time, making it more adaptable and powerful.

4. Can AI help people manage personal budgets?

Yes, many apps use AI to track spending, suggest savings goals, and warn users when they overspend.