Financial Services
How AI is reshaping the landscape of financial planning
Financial plans serve as the roadmap for the financial viability of a business. They determine the allocation of an organisation’s resources for achieving its financial goals. Traditionally financial planning has been a methodical, time-intensive process. It required detailed manual analysis to understand market trends, financial data, and more, to formulate long-term plans and accomplish business objectives. Finance professionals, using legacy systems, have traditionally spent hours sifting through vast volumes of data to make forecasts and recommendations.
The manual processes used needed to be carried on painstakingly and were also prone to inaccuracies and errors.
Enter AI (Artificial Intelligence)! And, all the shortcomings of manual processes are resolved!
Financial planning with AI
AI in financial planning has revolutionised the financial analysis and decision-making process. AI can process and analyse data at an unprecedented scale and speed. AI tools analyse vast volumes of financial data and offer insights to finance teams for better decision-making.
AI technologies that fuel financial planning include:
RPA(Robotic Process Automation): RPA tools automate manual tasks like data entry, etc., to enhance speed and accuracy.
ML (Machine Learning): ML is a self-learning technology that learns from existing datasets and makes predictions. ML makes accurate forecasts based on factors like historical data, market trends, current data, etc. These forecasts enhance decision-making and help formulate effective financial plans.
NLP (Natural Language Processing): NLP helps financial systems understand and process human language. Hence, AI bots can extract relevant information from multiple sources including human voice and process it to aid detailed financial analysis.
Predictive analytics deploys statistical methods to envision future eventualities based on historical data.
These technologies facilitate rapid processing and analysis of large volumes of financial data. They also uncover patterns and trends and offer valuable insights to finance professionals.
Role of AI in financial planning
AI enhances several aspects of financial planning for better outcomes.
Some financial functions that AI enhances include:
Facilitation of data-driven decision-making
AI tools can rapidly analyse extensive datasets in real-time and extract relevant patterns and trends which offer a more accurate and objective understanding of the current financial scenario.
Data-driven insights help financial planners assess market conditions, predict future trends, and optimise investment strategies.
Automation of repetitive tasks
Automation of routine tasks boosts efficiency, reduces operational costs, and minimises errors. Tasks like data entry, document verification, etc., can be automated using AI tools. These tools can extract and process data from multiple sources at enhanced efficiency and speed.
Fraud detection
Financial frauds have become rampant and need to be addressed to create robust financial plans. AI-based tools facilitate fraud detection and prevention. These tools identify suspicious activities by analysing transactions in real time. AI algorithms can identify anomalous patterns and behaviours that may indicate fraudulent activities. AI bots track user behaviour to identify spurious activity like unusual spending patterns or log-in attempts from any unusual locations, etc.
AI can also predict potential fraud risks based on historical data and market trends.
Risk identification and mitigation
Risk management is a critical factor in financial planning due to the inherent uncertainties in investments, financial activities, economic environment, market dynamics, etc.
AI algorithms identify potential threats and vulnerabilities such as geopolitical events, economic downturns, regulatory changes, etc. After the identification of risks, a risk assessment is carried out to evaluate the impact of each risk. Based on this data, businesses can allocate resources for risk mitigation.
Risk mitigation entails implementing strategies to reduce the impact of the identified risks.
Customer experience enhancement
Customer service is the cornerstone of effective financial planning to build trust and strengthen client relationships. AI-powered chatbots and virtual assistants boost customer experience by providing customised solutions round-the-clock. Hence, customers can resolve their queries at any time and from any location.
AI also boosts the speed and efficiency of customer service by automating routine tasks like inquiries related to account balances, transaction history, etc.
Ensuring regulatory compliance
Adhering to laws, rules, and regulations is mandatory for financial systems. AI ensures that an organisation’s financial systems adhere to regulatory requirements by automating compliance checks.
Final Takeaway
AI in financial planning has revolutionised the process by offering data-driven insights, automating routine tasks, enhancing risk mitigation, streamlining compliance, and more. These are some of the reasons why AI is being deployed extensively in the BFSI sector. Data reveals that the market size for AI in the BFSI sector is expected to grow from $ 19.87 billion in 2023 to $ 180.93 billion by 2031 at a CAGR of 31.8% during the forecast period. As AI advances offering new features and enhancements, it is likely to become an indispensable tool for the financial sector.
How can Infosys BPM help?
Infosys offers BPM for finance for business. Businesses can outsource their financial management to us and we provide customised solutions. Our BPM services help organisations transform their business processes, enhance overall performance, and standardise processes while reducing costs.
