Group 1: What is Gen AI and How Will it Change the Finance Industry Flashcards
What is Generative AI
artificial intelligence models that create content like text, images, and data based on input and learned patterns, simulating human creativity
what can Gen ai do
- Using advanced machine learning techniques, they analyze data, recognize patterns, and generate content in response to prompts
- they can provide insights for decision-making, predict market trends, and offer innovative solutions across industries
Why is Gen Ai important in finance
- according to a 2023 Mckinsey report, 1/3 of organizations are already using gen ai in at least one of their business functions
- this widespread adoption indicates transformation in the business world
- because of the implementation in the business world, it can influence our future careers - that is why we need to learn about it
- its become an issue because of how its capabilities improved, being able to do more things such as creating more complex content and decision-making
- this adoption creates opportunities (from increased efficiency) and risks (loss of jobs, ethical concerns)
what are cons of Gen ai
- bias and reliability of output
- ethical dilemma and data security
- security gap
how is bias and reliability of output a con
- if the model is trained with bias, the responses will be skewed toward that bias
- They might give the wrong answer but think that they will be right or will give different answers each time
because of the cons of bias and reliability what will workers in finance need to do
- they may need a different set of skills to work with gen AI
- they would need to know how to do things like:
- good questions to get the information they want
- Recognize potential bias
- Confirm the quality and validity of generated output and monitor performance models overtime
what is the con of ethical dilemma of data security
- with Gen ai, financial institutions use it to analyze vast datasets and generate synthetic data
- these are created with historical data where some of it can be sensitive consumer data
- because gen ai can access this data, it creates a risk where this data can be misused as well as consumers are having their data being used without their consent
what is the security gap con
- relating to the issue regarding data privacy, larger companies are able to develop their own AI models to reduce these fraud and security breaches
- but smaller companies don’t have access to these resources so they aren’t able to protect their or their clients data
what is the main pro of gen ai
efficiency & productivity = cost savings and higher returns
how is gen ai efficient
- can analyze large datasets, recognize patterns, and predict outcomes which offers insights for business decisions
- they automate more redundant, repetitive, tedious, tasks and can then have people focus more on other roles such as more detailed client insights and analysis of the data
how does the bank of america use ai
- they use ai to identify new business opportunities and optimize marketing campaigns to attract more clients = more revenue
- specifically, ai recommends personalized investment strategies to increase customer engagement and product adoption
what is quantitative trading (firms)
trading that involves the use of computer algorithms and programs to identify and capitalize on available trading opportunities
what doe quantitative trading firms use gen ai and LLM to do
- automate research tasks and data analysis
- enhance productivity for quant teams
- coding and backtesting support
what is llm
large language model
how does gen ai automate research tasks and data analysis
- Since quantitative trading involves processing enormous amounts of financial data and research, using gen AI helps them automate some of the more time-consuming tasks like summarizing economic reports, filtering regulatory filings, and analyzing financial news
- they are able to get data on all sorts of data sources and create detailed summaries in short amounts of time
