Financial Sector Services Improvement in the Era of Artiï¬ cial Intelligence

The paper provides a comprehensive scientific overview of artificial intelligence's (AI) evolution and impact in the financial sector. It traces AI's origins from the mid-20th century, defining its core objectives and typologies: narrow, general, and super AI. AI has significantly enhanced operational efficiency, fraud detection, risk assessment, customer service, and personalized banking through machine learning and big data analytics. It also transforms financial services by automating portfolio management, trading, compliance, and credit risk modeling. The paper highlights innovations like algorithmic trading, decentralized finance (DeFi), and AI-powered regulatory technology (RegTech), which promote financial inclusion and innovation. Furthermore, AI integration optimizes financial operations, improves profitability, predicts risks, and fosters sustainable competitive advantage. Challenges such as ethics, data privacy, and governance frameworks are acknowledged, emphasizing the need for a balanced approach combining human expertise and AI to responsibly harness benefits for a more efficient, inclusive, and resilient financial ecosystem AI's recent rapid growth has significantly transformed finance by improving efficiency, accuracy, and decision-making. Advanced machine learning and big data analytics automate routine tasks like fraud detection, risk assessment, and customer service via chatbots, lowering costs and errors. AI-driven predictive models enhance portfolio management and trading through precise market pattern analysis. Additionally, AI enables personalized banking by tailoring product recommendations and credit scoring based on customer behavior, boosting satisfaction and financial inclusion. Beyond traditional services, AI drives innovation in financial technologies and business models. Algorithmic trading uses AI for high-frequency trades, while decentralized finance employs AI-powered smart contracts for automated transactions. Fintechs utilize AI credit risk models to widen loan access, supporting underserved populations. Regulatory technology (RegTech) leverages AI for real-time compliance monitoring, reducing penalties and improving governance. This paper defines AI and financial development and explores how AI components improve financial sector services in the modern era.