How AI in finance is reshaping markets and compliance risks

AI revolutionizes finance as costs rise and regulators tighten oversight

Artificial intelligence (AI) has become a central part of financial infrastructure, reshaping how firms operate and compete. Over 70% of financial services professionals now expect AI adoption to increase operating costs within three years. Meanwhile, regulators and market participants are adjusting to its rapid expansion across trading, analytics, and customer experience.

Early automated trading relied on rigid rule-based systems. Today, machine learning and natural language processing allow platforms to analyse vast datasets, improving forecast accuracy—but also introducing risks from opaque decision-making.

The shift has been particularly sharp in retail trading. Since 2023, AI-driven strategies have grown in options and short-term equity markets, making retail activity a bigger factor in volatility spikes. At the same time, retail investors now access institutional-grade analytics, pushing banks and brokers to enhance their offerings while facing calls for stricter oversight. Major players are racing to embed AI deeper into operations. Salesforce leads with its Agentforce 360 platform, integrating AI agents into CRM for sales, service, marketing, and trading—all powered by the Atlas Reasoning Engine for compliant automation. Palantir Technologies dominates in data analytics, with its Artificial Intelligence Platform (AIP), launched in 2024, enabling real-time decision-making for logistics, risk assessment, and enterprise strategy. Regulators are responding to the surge. The EU’s AI Act, enforced since August 2024, sets harmonised rules for trustworthy AI, flagging high-risk financial uses like credit scoring. In the US, the SEC’s Investor Advisory Committee has pushed for mandatory disclosures on AI’s impact and governance, warning that transparency must keep pace with adoption. Cybersecurity has also become a priority. Financial chief information security officers (CISOs) are deploying AI to counter threats but stress that technology alone isn’t enough—strong governance, controls, and resilience planning remain critical. The financial upside is substantial. Generative AI could add $200 billion to $340 billion annually to banking revenues, depending on how firms scale and adapt their models. Yet those slow to implement risk falling behind as AI cements its role in pricing, risk management, and customer interactions.

AI’s integration into finance is accelerating, from trading floors to compliance teams. Firms that scale effectively stand to gain market dominance, while laggards face marginalisation in an increasingly AI-driven sector. With regulations tightening and costs rising, the next three years will test how well institutions balance innovation with accountability.