How Artificial Intelligence is Changing the World of Finance

Written by Scott Wilson

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One thing you can be sure about in the development of artificial intelligence: it will have to pay for itself, or it won’t happen.

With training expenses for the most up-to-date models estimated to cost $5 million or more per run, AI is not coming cheap.

One of the best places to find money is in the industry that is all about money in the first place: finance.

If there are advantages to come from machines that think faster and more expansively than human beings, the financial sector will sniff them out. Not only will high finance put up the money to develop AI, though… it will also invest heavily in funding AI developments that that make money off financial action itself.

Already, many AI engineers are working on Wall Street and at shadowy private equity firms to build algorithms that are all about hitting the gas on profitability in high finance.

The Financial Services Sector Pumps the Life Blood of the Economy

abstract codeThe financial services sector is a kind of circulatory system that extends its tendrils throughout the worlds of business and accounting. Through it courses the currency, the debt, and the credit on which the modern world runs.

The heart of the finance world is in banking. These institutions hold accounts for companies, individuals, and governments, generate loans, offer credit, and support the smooth flow of financial transactions that modern society demands.

Some banks also serve as brokerages, filling financial markets with customers and liquidity. Branching out from there, trading firms, financial management companies, insurance firms, credit card companies, and all kinds of transfer and investing services fill niches of demand.

Financial services all revolve around money and risk in some way.

The narrow slot in between hard currency and eternal loss is where they make their living. Any kind of competitive advantage, however narrow, is constantly in demand in finance.

Artificial intelligence may be the mother of all competitive advantages… if financial companies can get it right.

How High Finance Will Change with Help from Artificial Intelligence

investing on tabletWhile large language models (LLMs) are the flavor of the month in AI development right now, finance is more into numbers than language.

On the other hand, LLMs are likely to make a big splash in financial advising firms. Removing the need for person-to-person contact to deliver customer support or financial advice to individual clients can help firms deliver better and faster information. Available at any time, from anywhere, roboadvisors may not only be able to collect information and objectives directly from clients, but also invest and manage their assets without human intervention.

The soft skills of LLMs may also go toward offering trading firms more insights into how markets are moving. By reading and assessing sentiment in news reports, online forums, or even social media, algorithms may find the next big thing before anyone else even realizes it’s a thing at all.

The most impressive ability of AI today for the finance sector is the ability to instantly process very large numbers and develop unique insights and spot trends in financial data. One notable early use of machine learning algorithms comes from the world of high-frequency trading, where elite investment firms have built out quantitative analysis algorithms that quickly spot market moves and front-run trades before human traders even know what’s happening.

Financial firms also use AI in detecting anomalous transactions, flagging risks and fraudulent charges often well before the actual account holders notice anything wrong. Even in cases where no fraud is suspected, AI will help firms manage credit risk among customers and investments.

Additional intelligence will make these algorithms even more effective in the future.

What Sort of Jobs Are Available in the Financial Industry for AI Professionals?

business professionalThe finance industry is already a mecca for AI professionals. In fact, financial firms were out hiring the same kinds of people that the AI industry was pursuing before there were even such things as degrees in artificial intelligence.

According to Bloomberg, job listings in the finance sector requiring some level of AI skills jumped by 60 percent just between 2018 and 2019. Those include positions like:

Most of the big money for AI jobs in finance is at hedge funds. Of course, that’s also where the educational and experience requirements are highest. These positions can blend practical engineering expertise with aspects of research and development. Those firms are always on the hunt for the next big thing in applied AI to gain an edge in trading and investment analysis. So they want people who have practical skills in AI, but also the kind of theoretical grounding to come up with original ideas.

Big banks are also coming around to the need for AI professionals on staff. They may be more oriented toward fraud detection, risk management, customer service systems, and other defensive AI projects rather than trading assignments.

Finally, fintech companies are hungry for AI talent. These are the businesses that are forging into new services and new ways of providing current kinds of financial support, such as international and instant transfers, low-cost payment processing, and online tax prep and account consolidation.

Exploring College Degrees for AI Careers in the Financial Industry

tracking invesmentsAnyone who gets through even the most garden-variety degree program in artificial intelligence has absorbed all the various mathematical and statistical knowledge and skills to make it in the world of finance.

For most positions in large banking and investment firms, that means even a general Bachelor of Science in Artificial Intelligence or Bachelor of Science in Computer Science Machine Learning concentration is enough to open the doors. Rooted in those high-level math and logical concepts that finance revolves around, these degrees tack on the coding skills, algorithm design, and AI architectural skills that financial services firms are hungry for.

Of course, in a four-year bachelor’s program, there is enough room to take up a variety of electives that can improve a grasp on some of the finer points of financial services. Classes that build a better understanding of finances can include:

The overlap between AI and finance in classes like math and statistics will come in handy for students on this track.

A bachelor’s won’t be enough to qualify for the most elite firms and positions in financial AI, however. It’s already the case that the most effective firms on the cutting edge of new financial instruments and techniques head-hunt exclusively among master’s and PhD graduates.

So a Master of Science in Artificial Intelligence and Machine Learning is the right track to take for the most important positions. But it’s also quite common for firms to recruit from among candidates who have degrees in majors like:

Clearly, any of those majors that come with a specialization in artificial intelligence or machine learning will also serve as the right kind of qualification for finance jobs.

Certificates and Certifications Offer Other Paths into Financial AI Careers

woman day traderA whole crop of very experienced coders and mathematicians graduated from college long before AI degrees were even a thing. But there’s an answer to reskilling in new kinds of technology: educational certificate programs.

These short bundles of college-grade classes don’t stretch to cover every corner of AI training the way that degrees do. But they do offer the essentials, often in a specific area, that build on your existing knowledge and experience. Taking less than a year to complete, they are relatively inexpensive and offer a fast track to AI jobs in finance even for math, physics, or computer science majors.

There are also plenty of certificates aimed at finance majors who want to boost their AI skillset. A Machine Learning for Finance Certificate is one example.

Another option to help build credentials for these positions are professional certifications. Despite the similarity in the names, these aren’t intended to fill the same purpose as educational certificates. Instead, they are designed to test skills and assess qualifications to establish whether candidates meet specific standards.

Usually offered by either professional organizations or software and tool vendors, they are designed to show employers that certified candidates have the right experience and expertise to work with those tools or concepts.

There aren’t specific certifications aimed at AI in finance yet, but some of the more general professional AI certifications might apply to specific positions.

With salaries that are through the roof, competition is high for AI jobs in finance. Any edge is valuable in this industry. And it can be as hard to stay ahead as it is to get a jump in the first place. One thing is certain: the money only flows when the technology is working.