How AI is transforming the financial industry

Key Takeaways: 

• As AI becomes more common across industries, financial professionals should stay up to date on the latest technologies and use cases. 
• Financial professionals who invest time in learning AI basics could potentially be better positioned for long-term success.

02/20/2025 – The rise of AI offers exciting opportunities, but it also prompts an important question for financial professionals: how will this technology shape my role over time? The financial industry has never shied away from utilizing new technology, and AI is no different. Although we may never be able to accurately predict what AI will change, we know that having a human in the loop is crucial. Here’s what you can expect from the rise of AI: 

1. Elevated Strategic Advisory Roles
   With AI handling more of the mundane or routine tasks like data analysis and reporting, financial professionals may transition into more strategic roles that focus on broader client goals, tax efficiency, and long-term wealth-building strategies.
2. Collaboration with AI as a Coworker
   Rather than seeing AI as a competitor, financial professionals may increasingly collaborate with smart systems to generate insights. For instance, AI could help analyze a client’s historical spending patterns while the financial professional focuses on tailoring recommendations to the client’s unique circumstances. 
3. Upskilling and Continuous Learning
   Staying competitive will require developing new skills, particularly in understanding how AI functions, interpreting algorithm results, and implementing AI-driven solutions. Financial professionals who invest time in learning AI basics will potentially be better positioned for long-term success.
4. Better Work-Life Balance
   With tedious processes automated, financial professionals may see their workload streamlined, allowing them to focus on high-quality work without feeling bogged down by time-intensive manual tasks. Offloading these kinds of tasks could potentially lead to better work-life balance.

What about ethical considerations?

AI should be used responsibly and ethically, regardless of any gaps or gray area in legislation and regulation. It’s important to stay vigilant, as AI is always evolving. There are various AI courses offered by universities and companies that cover the ethics of AI in their trainings, although there isn’t one source of truth on how to responsibly utilize AI in your practice. One major consideration is bias in AI algorithms, which can lead to unfair or discriminatory outcomes when the data used to train these systems reflects societal prejudices.¹

Transparency is another critical issue; AI systems often function as "black boxes," making it hard to understand their decision-making processes. Additionally, concerns about privacy arise as AI systems increasingly collect, store, and analyze vast amounts of personal data. Addressing these issues requires collaboration between governments, tech companies, and independent organizations to establish regulations and guidelines that prioritize fairness, accountability, and human rights, which is ongoing. 

How Are Firms Using AI Now?

Many financial institutions and firms are already seeing tremendous benefits from using AI. Here are some examples of how organizations are leveraging AI today:

1. Enhancing Customer Support 
   Chatbots can offer enhanced customer service experience. Major banks, like Bank of America with their Erica chatbot for example, use AI to provide customer support.² Erica helps customers check balances, track transactions, and even offer personalized savings tips—all without human intervention.
2. Credit Decision-Making 
   Lending companies such as Upstart are leveraging AI to assess creditworthiness in applicants. By analyzing nuanced data points often ignored in traditional processes, these tools pave the way for fairer, data-driven lending.
3. Algorithmic Trading 
   AI systems are a game-changer in the investment space. Firms like JPMorgan Chase use machine learning algorithms to execute trades at optimal times and prices, maximizing returns for institutional clients.³
4. Fraud Prevention 
   Companies like PayPal⁴ utilize AI-powered fraud detection systems that monitor transactions for suspicious patterns in real time. By doing so, they can prevent fraudulent activity from taking place and enhance overall trust within their ecosystems.
5. Portfolio Optimization 
   Fidelity⁵ and BlackRock⁶ are among the firms harnessing AI to optimize client portfolios, evaluating numerous variables to fine-tune investments tailored to individual risk tolerances and financial objectives.

Redefining Financial Services with AI

The financial industry, like many industries, stands at a pivotal moment with AI, but no one can say for sure what the future holds. For now, AI is no longer a “nice-to-have” but a critical tool reshaping how financial professionals solve problems, deliver services, and drive growth. By leveraging AI wisely, you can stay competitive while offering exceptional value to your clients. Whether it’s automating repetitive tasks, managing financial risks, or delivering hyper-personalized advice, AI opens the door to unprecedented possibilities. By being proactive about integrating AI into your practice, you can help lead the way in redefining the future of financial services.