Learn more about machine learning in finance with this article that covers applications, use cases, and careers.
The use of machine learning techniques in the financial industry is steadily evolving. Today, machine learning (ML) is used for everything from risk assessment to trading decisions. It has changed how the financial services industry operates and manages data. In the following article, learn more about advances in financial machine learning and how you can advance your career in the field.
Machine learning, or ML, is a branch of computer science and artificial intelligence (AI). It is the design and development of algorithms capable of "learning" from data to make predictions. In other words, machine learning models can mimic the cognitive process by acquiring knowledge through data and using it to process and analyze information. It is used to automate cognitive tasks.
Machine learning systems help people understand massive volumes of data and uncover important patterns within them. This information is used to enhance business processes, make informed decisions, and assist with prediction tasks. Financial services companies use it to offer better pricing, mitigate risks caused by human error, automate repetitive tasks, and understand customer behavior.
Here are ten common applications of machine learning in financial markets.
The ability to streamline and automate business processes benefits financial companies in several ways. For example, organizations can use these technologies to automate menial tasks such as data input and financial monitoring. This enables employees to focus on tasks that actually require human intervention.
One of the most practical applications of machine learning in finance is in customer relations. Finance companies utilize ML technology like chatbots to improve the customer experience through on-demand help and real-time recommendations. Additionally, insurance firms often automate customer acquisition and onboarding to make the process faster and easier.
Customer engagement is another critical area for machine learning and AI utilization. IoT devices generate considerable data useful for understanding customer behavior and preferences [1]. The data can then be used to create personalized marketing campaigns or to improve customer service methods. Better overall customer experience typically leads to higher customer satisfaction rates and retention.
Robo-advisors are a notable example of machine learning use cases in finance. They can vary slightly depending on the financial company offering the service. However, the term "robo-advisor" typically refers to online services that provide investment advice and help users create and manage investment portfolios. Robo-advisors depend on a wide range of user input preferences. For example, risk preferences gauge user needs by collecting information about the decisions they would make in the face of unpredictable circumstances.
The finance industry often uses ML technology to predict stock prices and influence trading decisions. It works by using large historical data sets to make predictions about the future. Here are two types of trading that machine learning technology enables:
Algorithmic trading: Identifying patterns and developing trading strategies with speed and accuracy
High-Frequency Trading (HFT): Identifying trading opportunities and executing trades at high speeds
Machine learning models learn from identifying patterns. These patterns help them understand normal behavior and make it easier to detect suspicious activities, like money laundering or insider trading.
The finance industry uses machine learning tools to assess loan applications and calculate credit scores. Online lending platforms generate real-time reports and recommend accessible loans to users based on their financial history.
ML technology is often used in finance to support investment decisions by identifying risks based on historical data and probability statistics. It can also be used to weigh possible outcomes and develop risk management strategies.
Machine learning in finance has made extracting and analyzing unstructured data from documents like contracts or financial reports easier.
Big data analysis has become essential for understanding customer behavior and trends. Machine learning and AI can help you make sense of large data sets, identify patterns, and make predictions. This can help to gain a competitive edge by making better decisions faster than your competitors.
The trade settlement process can be time-consuming and error-prone. At times, trades can even fail. Prior to the introduction of machine learning in finance, office staff at financial institutions would need to process the trade failure, identify the reason, and resolve the issues. This labor-intensive process has been simplified by using ML tools that automatically flag issues and offer recommendations for resolution.
Asset managers use ML and AI to value and manage assets, including stocks and bonds. Data-driven decision-making helps eliminate human error caused by confirmation bias or loss aversion.
Businesses in the finance sector increasingly rely on data-driven decision-making. As the field of machine learning evolves, there will be new opportunities for those with machine learning expertise to apply their skills in the finance sector.
There is a high demand for qualified workers with machine learning expertise. According to the Bureau of Labor Statistics (BLS) website, machine learning jobs fall under the employment category of computer and information research analysts. The BLS projects that employment in this category will grow by 26 percent from 2023 to 2033 [2], much faster than the average for all occupations.
Banks, hedge funds, and other financial firms seek machine learning talent, and there is significant demand for machine learning professionals in finance with very competitive pay. Here are a few examples of machine learning careers in finance with their respective salaries:
*Note: All salary information was sourced from Glassdoor in January 2025. Figures represent the average yearly base salary, which doesn’t include profit-sharing, commissions, bonuses, and other forms of additional pay.
Machine learning data analyst: $78,922
Quantitative research analyst: $147,941
Machine learning engineer: $122,394
Machine learning modeler: $113,361
Data scientist in finance: $113,415
Machine learning developer: $112,635
Principal data scientist: $192,927
Machine learning architect: $134,509
There are various types of machine learning jobs out there, each requiring different qualifications and skills. For example, a machine learning engineer will need strong engineering and programming skills, while a machine learning scientist will need strong mathematical and statistical skills. Some of the common criteria for applying for machine learning jobs include:
A four-year degree in computer science or a related field. Fifty-one percent of data scientists have a bachelor's degree, 34 percent have a master's degree, and 13 percent have a doctorate [3]
Proficiency in using programming languages, including Python, R, and Java
Experience with statistical analysis and machine learning algorithms
Ability to effectively communicate results of data analysis to non-technical audiences
Ability to work with large data sets
If you're new to the field, consider learning the basics from an industry leader like Google. In this self-paced, online, beginner-friendly course, you'll gain foundational knowledge about data visualization, ethics, and analysis. Upon completion, you'll earn a Professional Certificate for your resume:
Machine learning and finance often work together, and you can find a role within the financial field that uses machine learning skills. You can find various online resources devoted to teaching the basics of machine learning, including courses from leading universities such as Stanford and MIT. For example, the Machine Learning Specialization offered by Stanford and DeepLearning.AI is one of our most popular courses. It is a great way to learn and practice machine learning fundamentals.
Springer US. “How Artificial Intelligence Will Change the Future of Marketing, https://link.springer.com/article/10.1007/s11747-019-00696-0." Accessed January 13, 2025.
US Bureau of Labor Statistics (BLS). “Computer and information research scientists, https://www.bls.gov/ooh/computer-and-information-technology/computer-and-information-research-scientists.htm.” Accessed January 13, 2025.
Zippia. "Data Scientist Education Requirements, https://www.zippia.com/data-scientist-jobs/education/." Accessed January 13, 2025.
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