Overview of AI in finance

Hi, my name is Alejandro Lopez-Lira. I'm an assistant professor of finance at the University of Florida. I'm here to give a lecture about an overview of AI in finance.

So, first, we're going to cover a brief introduction to the topic.

Artificial intelligence (AI) refers to machines mimicking human intelligence to perform tasks and make decisions. It involves technologies like machine learning and natural language processing. Of course, recently, everybody has been taking a look at this AI via these models, like ChatGPT or Co or Bard. Of course, AI adoption in financial services has grown rapidly in recent years. For example, some key applications are, of course, algorithmic trading, risk management, customer service, credit scoring, and portfolio management. In algorithmic trading, a lot of hedge funds use AI to make trading decisions and automatically execute trades normally with a human in the loop. In risk management, there's several applications like detecting fraud, analyzing risk patterns, and predicting losses. In customer services, we have the AI chatbots and robo-advisors for customer engagement and for customer advising. Furthermore, in credit scoring, we are, of course, looking at new technologies like automated credit approval and risk assessment, and in portfolio management, we're looking at automated rebalancing, optimized investment strategies. The key advantage of artificial intelligence is that it can quickly analyze massive datasets related to financial markets, customers, products, etc. Of course, this allows for more accurate predictions, calculations and decisions vs human analysis. The benefits include improved efficiency, better risk insights, higher returns, and more personalized customer service. Just a quick brief/glance at the historical context.