Narrative Review: Applications of Artificial Intelligence in Finance

Abstract

This paper considers the applications of artificial intelligence (AI) in key financial areas, including trading and stock prediction, risk management, fraud detection, and portfolio optimization. AI technologies, particularly machine learning, and natural language processing, enhance financial decision-making by analyzing vast data sources in real-time, identifying complex patterns, and enabling adaptive strategies. In trading, AI improves predictive accuracy and execution speed, while in risk management and fraud detection, it strengthens institutions' ability to identify emerging risks and prevent fraudulent activity. For portfolio optimization, AI enables dynamic asset allocation, aligning with investor preferences and market conditions. This review highlights both the benefits and challenges of integrating AI in finance, including ethical considerations such as transparency and data privacy, and emphasizes AI’s potential to advance a more data-driven, resilient, and client-centric financial industry.

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