Artificial Intelligence and Machine Learning in Finance: Key Concepts, Applications, and Regulatory Considerations

Abstract

This chapter explores the role of artificial intelligence (AI), particularly its subfield of machine learning (ML) methods, as a core technology of the fintech revolution in the financial services industry. It simplifies some of the complex concepts related to AI by introducing the main ML paradigms and related techno-methodic aspects. This chapter uses real-world examples to illustrate how next-generation AI powered by ML is transforming the financial services industry. Next, in illustrating the risks associated with AI adoption, this chapter discusses the need for regulation to address the essential facets of AI governance, including transparency, accountability, ethics, and responsible use. Lastly, it looks at emerging regulatory approaches across leading global jurisdictions. The primary goal is to give readers an initial understanding of AI's profound impact on the financial sector.

Citation

Azzutti, A. (2024), "Artificial Intelligence and Machine Learning in Finance: Key Concepts, Applications, and Regulatory Considerations", Baker, H.K., Filbeck, G. and Black, K. (Ed.) The Emerald Handbook of Fintech, Emerald Publishing Limited, Leeds, pp. 315-339. https://doi.org/10.1108/978-1-83753-608-520241042