Applications of Artificial Intelligence in the Financial Sector: Current Challenges and Future Directions
DOI:
https://doi.org/10.54097/wp0eqf05Keywords:
Artificial intelligence; financial technology; risk management; financial regulation.Abstract
As the global financial business becomes more digital, artificial intelligence (AI) has become the main force behind change in the whole industry. This paper’s research object is the application of AI within the financial sector, focusing specifically on the primary challenges this integration presents. This paper systematically and comprehensively examines the application of AI in finance, concentrating on three principal challenges: the absence of transparency and interpretability in model decision-making, excessive dependence on historical data and intrinsic biases, and ethical dilemmas and regulatory delays arising from swift technological progress. This study provides a systematic approach based on building explainable AI (XAI), enhancing data foundations and model robustness, and constructing a comprehensive governance framework through a thorough examination of the underlying causes of these difficulties. It looks at how these solutions will work together and what benefits they will provide, as well as what the future holds for combining AI with new technologies like blockchain and quantum computing. This study seeks to establish a theoretical framework for financial institutions, regulators, and researchers, thereby fostering the healthy, dependable, and sustainable advancement of artificial intelligence in the financial sector.
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