Artificial intelligence (AI) is the study of intelligent entities and their design – referring to a system that can observe its surrounding environment and take action to achieve its goals. This study focuses on the financial industry, which has been the first to bear the brunt of the rise of AI, and discusses related financial innovations, practical applications, and potential challenges and responses for the Taiwanese financial industry.
The connotations of modern AI include memory, judgment, and cognition. Its benefits to the financial industry are multifaceted, including smart customer service, identity verification, precision marketing, robotic financing, process automation, customer credit risk assessment, Regtech, improvements in user experience, and operational optimization all help banks reduce their operating costs and improve their efficiency and profitability. The use of AI in the financial industry however requires overcoming non-trivial structural problems including technology, operations, and supervision.
Potential challenges to the financial industry from the rise of AI include a shortage of skills and talent, transformation and re-engineering of corporate culture, acquisition and regeneration of training data, and development of valuable applications. In response, this study recommends that financial institutions consider idiosyncratic strategies to fit AI into their own business, rather than chasing new and unique technologies. Through education and training, financial practitioners can learn the foundations of AI, which, when combined with domain knowledge and AI specialties, will lead to further financial innovation. Institutions should continue to upgrade their financial information infrastructures, develop finance-specific AI, and regard AI as a part of overall human resource allocation, allowing human-machine collaboration to play a multiplier role.