Artificial Intelligence (AI) is rewriting the playbook in finance, pushing the boundaries of trading, investment strategies, risk management, and decision-making. With the potential to boost productivity by 40% in the sector by 2025, as reported by BCG, AI is becoming a fixture in finance. In 2024, NVIDIA found that more than 60% of financial services firms had already integrated AI into their operations, with another 25% actively planning to do so. But as AI shapes the industry, questions arise: Is this transformation an unqualified boon, or does it risk turning finance into a game governed by algorithms?
Globally experts are divided between seeing AI as both an innovation and a disruption.
“AI is fundamentally transforming the finance industry by enhancing decision-making, improving risk management, and increasing operational efficiency,” Ahuja explains. “In the coming years, it will be both a disruptor and a tool for efficiency. The degree to which AI is beneficial or disruptive will depend on how responsibly it is integrated into the industry,” says Kush Ahuja, Head of Eurasia and Middle East at the Association of Chartered Certified Accountants (ACCA),
How AI is Changing the Rules of Finance
The integration of AI into finance is not just about automation; it’s about using technology to make better, data-driven decisions. AI in finance now plays roles in fraud detection, predictive analysis, and customer service, areas where it has shown transformative potential. AI-driven tools can sift through massive data sets, uncover hidden patterns, and generate accurate predictions that inform everything from daily trading decisions to long-term portfolio management.
Consider algorithmic trading. AI-powered platforms now execute trades at speeds beyond human reach, creating opportunities for high-frequency trading (HFT). According to IBM, around 80% of financial firms now use AI for real-time market analysis and trade execution, allowing thousands of trades to occur in microseconds. The impact on trading is immense, but it raises the question: can these systems operate without inducing market instability?
Ahuja explains that AI’s value in finance is far beyond speed alone – “AI’s growing role in trading and investment isn’t just about speed or data processing. Its real value lies in its ability to offer retail traders access to sophisticated analytical tools, empowering them to make more informed, data-driven decisions,” he says.
Moreover, AI’s role extends to portfolio management. By analyzing data on economic trends, geopolitical risks, and market histories, AI can create more diversified and resilient portfolios. Forbes reports that AI-driven portfolio management has the potential to reduce risk exposure by 25%—a crucial advantage in today’s volatile markets.
Practical Successes and Setbacks
Several financial giants already exemplify the profound impact of AI. Renaissance Technologies, known for its legendary Medallion Fund, uses AI to identify trading patterns that defy human detection. Over decades, its AI-driven strategies have led to annualized returns exceeding 66%, making it a unique success story. BlackRock, the world’s largest asset manager, has also invested heavily in AI, partnering with companies like Microsoft and NVIDIA to reinforce its analytical power and enhance investment strategies.
Yet, as Ahuja cautions, over-reliance on AI in high-stakes finance comes with risks. Flash crashes, triggered when trading algorithms respond too quickly to minor market fluctuations, underscore the potential volatility introduced by algorithmic systems. In Ahuja’s view, AI must complement human judgment, not replace it entirely.
“Relying too heavily on AI in high-stakes scenarios without adequate oversight is a risk,” he says. “Algorithms, while powerful, are not infallible, and unforeseen biases can lead to unintended consequences.”
The Ethical Landscape of AI in Finance
The ethical and regulatory dimensions of AI in finance cannot be overlooked. ACCA’s recent AI Monitor report on trust in AI highlights these challenges, urging the development of governance frameworks that prioritize ethical practices. For Ahuja, transparency is key: “AI brings ethical challenges, particularly with transparency and bias. Complex algorithms can obscure decision-making processes, making it difficult to fully understand and trace AI-driven outcomes,” he says.
Regulatory bodies are increasingly scrutinizing AI systems to ensure they operate within safe and transparent boundaries. However, as Ahuja notes, this oversight must continue evolving to keep up with AI’s rapid pace. “Existing frameworks are evolving, but further regulation may be necessary to address the rapid pace of AI adoption,” he observes.
Preparing Finance for an AI-Centric Future
As the AI landscape in finance advances, the skills required of professionals will also shift. ACCA is proactive in helping the industry adapt, offering training programs that bridge traditional finance expertise with the data-driven demands of AI. Ahuja anticipates a workforce transformation that will emphasize data literacy, ethics, and governance. “AI will redefine finance roles by shifting them toward more data-driven, analytical, and predictive responsibilities,” he says.
Embracing AI Responsibly
The finance industry’s AI evolution offers powerful benefits, from improving fraud detection and forecasting accuracy to democratizing sophisticated trading tools for individual investors. However, as Ahuja reminds us, the industry must be cautious. “The responsibility of decision-making will always ultimately lie with humans,” he emphasizes. “As we move ahead, the capability to make decisions based on a wide range of inputs is going to be increasingly valued.”
With careful integration, AI has the potential to revolutionize finance in a balanced, responsible way. For finance professionals, the challenge lies in mastering this new toolkit while upholding the human-centered values that define ethical financial practice. As AI grows more embedded in the financial landscape, the industry’s task is clear: harness the transformative power of AI while ensuring it remains a tool that serves people—not a force that controls them.
