Applications of AI in Financial System

Applications of AI in Financial System

Santosh Kumar (IMS UNISON University, India) and Roopali Sharma (Birla Institute of Technology, India)
DOI: 10.4018/978-1-5225-2234-8.ch005
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Abstract

Role of computers are widely accepted and well known in the domain of Finance. Artificial Intelligence(AI) methods are extensively used in field of computer science for providing solution of unpredictable event in a frequent changing environment with utilization of neural network. Professionals are using AI framework into every field for reducing human interference to get better result from few decades. The main objective of the chapter is to point out the techniques of AI utilized in field of finance in broader perspective. The purpose of this chapter is to analyze the background of AI in finance and its role in Finance Market mainly as investment decision analysis tool.
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History Of Ai In Field Of Finance

History of AI in Financial services domain can be traced back from Pacific National Bank of USA in 1987, set-up a Fraud Prevention Security Task force to check the unauthorized use of cards at ATM machines and vendor counters. The bank build a prototype on a regular office computer to perform as warning system for fraud prevention, modeled around the weather warning systems that warned before possible natural disasters like cyclones and earthquakes. This prototype was successful and paved the way for AI-based technology into consumer interactive products and services. Thus,AI has found a new home in financial industries and used as a valuable tool to many business applications for decision making.

In 2001, Wednesday, 8 August, BBC has flashed a new “Robots beat humans in trading battle”. Technology giant IBM pitted robotic commodity trading agents, known as “bots”, in opposition to humans in trading Commodities, pork bellies and gold. The bots made 7% more return than the human traders, reported in New Scientist magazine.

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