Research pick: Financial intelligence - "Artificial intelligence and its adoption in financial services"

The transition of many aspects of human activity into the digital realm is taking place rapidly. This is apparent perhaps nowhere more so than in financial services. Research in the International Journal of Services Operations and Informatics reports on how one particular aspect of “digital” is evolving rapidly in this realm – artificial intelligence, AI.

Renato Lopes da Costa, Miguel Cruz, Álvaro Dias, Rui Vinhas da Silva, and Leandro Pereira of the Instituto Universitário de Lisboa in Lisbon and Rui Gonçalves of PIAGET Almada in Almada, Portugal, have looked at the perceptions of those in the financial services industry and AI experts on the role and potential of AI in the sector.

The team suggests that as technology evolves so rapidly there is now pressure on traditionally conservative industries to reconfigure their business models to take advantage of innovations as never before. Indeed, one of the greatest pressures is on companies to find ways to handle vast amounts of data in smart ways. AI could be a significant part of the answer to this problem.

The team points out that so far the financial services industry may well have lagged behind in adopting and adapting to algorithms and AI, whereas the transportation, cybersecurity, and entertainment industries have been early adopters where solutions to their problems almost presented themselves in navigating logistics detecting fraud and intruders, and in developing recommendation systems and the like.

As with any paradigm shift in practices in an industry, there will be winners and losers, at the present time executives of traditional corporations are perhaps anxious of the competition from new companies with AI expertise. Those older companies may well not be ready to adapt to the new landscape, but they ought to heed the warnings of other staid industries where the old, analog business models failed in the face of digitalisation. The transition to AI systems is still in the early stages even among the most innovative of companies but it will happen whether some choose to ignore it or not.

da Costa, R.L., Cruz, M., Gonçalves, R., Dias, Á., da Silva, R.V. and Pereira, L. (2022) ‘Artificial intelligence and its adoption in financial services’, Int. J. Services Operations and Informatics, Vol. 12, No. 1, pp.70–86.