System Dynamics Approach for Adoption of Artificial Intelligence in Finance

Abstract

Purpose—The purpose of this paper is to identify the challenges and enablers evolved in context to adoption of artificial intelligence specifically in finance sector and to analyse the effect of this disruptive technology on the financial performance and market capitalisation of the organisation. Design/Methodology/Approach—The study is exploratory and empirical in nature. Factors of adoption were determined on the basis of literature. The researchers have constructed a causal loop diagram with the help of VENSIM software to show the feedback loops of various factors. This paper also examines the determining factors that form the basis of adoption of artificial intelligence which directly contributes to increase in financial performance and market capitalisation of the organisation. A system dynamics model is constructed for this purpose using Stella software. Findings—The results suggest that apart from various risks and challenges involved in adoption of artificial intelligence, it is imperative for all financial institutes or companies involved in financial tasks to adopt artificial intelligence to achieve competency in global competition. The simulation of SD model clearly indicates that adoption of artificial intelligence in finance will help in further increase of financial performance and market capitalisation of organisation. Originality/Value—This paper contributes to the integration of emerging stage of technology, artificial intelligence and finance sector through systems dynamics model which provides holistic view to the problem. There are some literatures available related with integration of artificial intelligence and finance, but they lack the bird’s-eye view on the scenario using SD model. Presently, there are few such endeavours available in the literature.