Humans + AI in financial decision-making: consumer, portfolio, and organizational


Arguably the entire finance industry can be framed as a massive inter-related array of decisions, by both clients and financial insttutions.

In this world AI wil be transformative, in most cases not by supplanting humans in the decision-making process, but in playing a role in ‘Humans + AI’ decision-making.

I was recently interviewed for the NAB Digital Next podcast for an episode titled Futurist Ross Dawson on humans and AI achieving more together. You can listen here, with some distilled reflections below.

The conversation was far-ranging in explaining the concept of Humans + AI and its implications in finance and large organizations.

One segment focused on various aspects of financial decision-making. Here is a summary of the main points I shared on the evolving role of AI in consumer, portfolio and organizational decisions:

Consumer financial decisions

Personalization and Empowerment
AI enables the distillation of complex financial information into personalized advice tailored to individuals’ learning styles and emotional states. This personalized approach empowers consumers to make informed decisions aligned with their unique circumstances and preferences.

Enhanced Financial Literacy
Technology can bridge the gap in financial literacy by externalizing consumers’ approaches to financial management and guiding them through their financial positions. This assistance is particularly valuable for individuals lacking financial literacy, offering support and guidance in navigating financial complexities.

Value Creation for Consumers
The ultimate goal is to provide services that help consumers feel in control of their financial destinies. By harnessing AI to analyze consumer data and provide personalized insights, financial institutions can offer valuable tools and guidance that empower individuals to make better financial decisions.

Portfolio decision-making

Complex Decision-Making Process
Portfolio decision-making involves analyzing investment basics, conducting stress tests, and exploring various scenarios. This process is multifaceted and requires careful consideration of factors such as asset allocation, risk management, and strategy development.

AI-Assisted Decision-Making
AI can play a crucial role in assisting investors by providing recommendations with justifications. By leveraging AI algorithms, investors can make informed decisions while maintaining control over their portfolios. AI helps navigate the complexities of investment by distilling vast amounts of data into actionable insights.

Risk Management and Scenario Analysis
AI facilitates risk management by conducting stress tests and scenario analysis. By simulating different market conditions and potential outcomes, investors can better understand the risks associated with their portfolios and make adjustments accordingly.

Role of AI in Institutional Settings
Within financial institutions, AI serves as a valuable tool for portfolio managers and investment professionals. It complements human expertise by providing data-driven insights and facilitating decision-making processes. AI’s role is particularly prominent in tasks that require cognitive capabilities and domain knowledge.

Organizational Decision-Making and Leadership

Trust and Communication
Effective leadership involves fostering trust between employees and leadership. Clear communication about the organization’s goals and intentions regarding AI integration is crucial for gaining employee buy-in and minimizing resistance to change.

AI Integration Strategy
Financial institutions must view AI as more than just a tool for efficiency but as a means to reimagine workflows and optimize human capabilities. Leaders should develop a strategy for integrating AI into organizational processes while emphasizing its role in augmenting human decision-making rather than replacing it.

Reconfiguration of Workflows
AI enables the reconfiguration of workflows to optimize human-AI collaboration. By creating modularized, configurable workflows, organizations can allocate tasks dynamically and capitalize on the unique strengths of both humans and AI.

Empowering Employees
Leadership should empower employees to experiment with AI tools and develop competencies in using them effectively. Encouraging experimentation and providing support for learning and development can accelerate AI adoption and drive innovation within the organization.

Consideration of Stakeholders
Financial institutions must consider the impact of AI on all stakeholders, including customers, employees, shareholders, and the broader community. Integrating AI should focus on augmenting human capabilities and creating positive outcomes for all stakeholders.