Book Title: Intelligent Systems
Editors: Dr. S.C. Vettivel, Dr. Leema Nelson and Dr. D. Poornima
ISBN: 978-81-979197-4-9
Chapter: 10
DOI: https://doi.org/10.59646/isc10/259
Authors:
M. Pritheeka, Assistant Professor, Department of MBA, Prathyusha Engineering College, Aranvoyal Kuppam, Tiruvallur, Tamil Nadu, India
D. Bhavani, Assistant Professor, Department of MBA, Anand Institute of Higher Technology, Kalasalingam Nagar, OMR, Kazhipattur, Chennai, , Tamil Nadu, India
Abstract
Artificial Intelligence (AI) has emerged as a transformative force in the financial industry, fundamentally altering traditional practices and introducing innovative solutions that enhance efficiency, reduce risk, and provide deeper insights into market behavior. AI’s integration into finance is driven by its unparalleled ability to process and analyze vast amounts of data, uncover patterns, and make predictions that were previously impossible or too time-consuming for human analysts. Key areas of impact include algorithmic trading, where AI-powered systems execute trades at speeds and volumes far beyond human capabilities, and risk management, where AI models predict potential risks and offer real-time insights into market volatility. AI also plays a critical role in fraud detection and customer service, offering personalized and timely responses through advanced analytics. As AI continues to evolve, its role in finance will be shaped by emerging trends such as Explainable AI (XAI), which addresses the growing demand for transparency in AI decision-making, which aligns financial practices with social, and governance (ESG) criteria. Despite its numerous benefits, the adoption of AI in finance faces significant challenges, including regulatory hurdles, ethical issues, and the integration of AI with legacy systems. This paper explores the profound impact of AI on the financial sector, the challenges it presents, and the future prospects for its continued evolution.