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AI IN FINANCE

How AI is used in finance

AI in finance is mostly unglamorous: reading documents, flagging odd transactions, scoring risk, drafting reports. Here is where it is actually used, what the surveys and regulators say, where it fails, and what it means for a small deal team.

Short answer: AI is used in finance to read and summarise documents, detect fraud and money laundering, score credit risk, optimise trading and portfolios, draft reports, and, on the deal side, screen targets and speed up due diligence. Adoption is now the norm rather than the experiment. The open questions are about control, not capability: who checks the output, and what happens when it is wrong.

How widely is AI used in finance?

The Bank of England and FCA survey found that 75% of UK financial firms were already using AI, with a further 10% planning to within three years. The same report found that a third of all AI use cases were third-party implementations, and that foundation models made up 17% of use cases.

CHECKED 30 SEP 2026 · Bank of England and FCA, AI in UK financial services 2024

Inside the finance function itself, Gartner found 59% of finance teams using AI in 2025, against 58% in 2024 and 37% in 2023, in a survey of 183 CFOs and senior finance leaders. Growth has flattened, and data quality and skills are the barriers named. Gartner’s own page blocked automated access, so this is cited from CFO Dive’s report of it.

CHECKED 30 SEP 2026 · CFO Dive reporting Gartner's finance survey

Read those two together. Adoption jumped quickly, then plateaued once the easy wins were taken, and what separates firms now is whether their data and processes are clean enough for the tools to work.

Where AI is used in finance

The main uses of AI in finance, what it does in each, and where a person still decides.

USE

Fraud and AML

WHAT THE AI DOES
Flags unusual transactions and patterns across large volumes
WHERE A PERSON DECIDES
Whether a flagged case is real, and whether to file a report

USE

Credit and underwriting

WHAT THE AI DOES
Scores applicants, including from cash-flow data
WHERE A PERSON DECIDES
Policy thresholds, exceptions, and explaining a refusal

USE

Trading and portfolios

WHAT THE AI DOES
Signals, execution and portfolio optimisation
WHERE A PERSON DECIDES
Risk limits and strategy

USE

Reporting and FP&A

WHAT THE AI DOES
Extracts figures from documents, drafts variance commentary
WHERE A PERSON DECIDES
What the numbers mean and what goes to the board

USE

Deal screening and diligence

WHAT THE AI DOES
Reads CIMs and data rooms, extracts financials, drafts summaries
WHERE A PERSON DECIDES
Whether to pursue the deal, and the price

Fraud detection and anti-money-laundering

Pattern detection over huge transaction volumes is what machine learning does best, which is why fraud and AML sit among the earliest and most established uses. The Bank of England survey lists them among the highest perceived current benefits of AI in financial services. The catch is false positives: a model that flags everything is a model people stop reading.

Credit scoring and underwriting

The appeal is reaching people a traditional score cannot see.

A FICO pilot using alternative data found that as many as half of applicants who had no score received one of at least 620, a common underwriting threshold. The same briefing notes more than 45 million US consumers lack the history for a credit report or score. The figures are from 2023 or earlier.

CHECKED 30 SEP 2026 · Federal Reserve Bank of Kansas City

A FinRegLab study found that a machine-learning model combining credit bureau and cash-flow data was the most predictive overall and across all subgroups it examined.

CHECKED 30 SEP 2026 · FinRegLab, July 2025

Reporting, FP&A and document extraction

Most of a finance team’s week is moving numbers out of documents and into models. This is the least dramatic use and the one with the clearest payoff, because the task is bounded and the answer can be checked against the page it came from.

FINRA’s 2026 oversight report names summarisation and information extraction from unstructured documents as the leading generative AI use case among member firms.

CHECKED 30 SEP 2026 · FINRA 2026 Annual Regulatory Oversight Report

AI in private equity and M&A

Deal work is document work: a CIM, a set of financials, a data room. That makes it a natural fit, and the surveys show it.

Deloitte’s survey of 1,000 senior corporate and private equity leaders reported that 86% had integrated generative AI into M&A workflows. By stage, 40% used it for strategy and market assessment, and 35% each for target screening and due diligence. 67% named data security as a leading concern.

CHECKED 30 SEP 2026 · Deloitte survey of generative AI in M&A

Bain’s survey of more than 300 M&A executives found 45% now relying on AI, and describes adoption as having more than doubled during 2025.

CHECKED 30 SEP 2026 · Bain M&A Report 2026

For a large firm with an analyst bench, AI is an accelerator. For a team of one to three with no analyst, it is closer to the difference between reading the CIMs and not reading them. A principal who sees twenty inbound deals a week either triages by gut or triages by numbers, and pulling three years of financials out of a PDF used to be an evening.

A workable first-pass workflow for a small deal team

  • Extract, do not conclude. Have the tool pull revenue, EBITDA, margins and add-backs from the CIM into a table, each figure linked to its source page.
  • Screen against a written mandate. Size, sector, geography and margin thresholds turn triage from a mood into a filter.
  • Check the numbers that matter. Spot-check the extraction on the two or three figures the decision rests on, against the page.
  • Write the conclusion yourself. Let a memo builder assemble the structure, then put your judgement in it.

The useful question is never whether the AI is smart. It is whether you can see where each number came from.

The risks, and what regulators are saying

FINRA defines hallucinations as “instances where the model generates information that is inaccurate or misleading, yet is presented as factual information”, and flags AI agents acting autonomously without human validation and approval as a risk.

CHECKED 30 SEP 2026 · FINRA 2026 Annual Regulatory Oversight Report

In April 2026 the Federal Reserve issued SR 26-2, revised model risk management guidance that supersedes and replaces SR 11-7 from 2011. It emphasises a risk-based approach and is aimed mainly at banks with more than $30 billion in assets. Older articles that cite SR 11-7 as current are out of date.

CHECKED 30 SEP 2026 · Federal Reserve SR 26-2

The SEC charged two investment advisers, Delphia and Global Predictions, for false claims about their use of AI, with penalties of $225,000 and $175,000. Chair Gensler called it “AI washing”. If you say you use AI, you have to be doing it.

CHECKED 30 SEP 2026 · SEC press release 2024-36

Under the EU AI Act, systems used to evaluate the creditworthiness of natural persons or set their credit score are classed as high-risk, with an exception for systems used to detect financial fraud. A Gibson Dunn note on the provisional Digital Omnibus agreement says compliance for stand-alone Annex III systems moves to 2 December 2027; check the final text before relying on the date.

CHECKED 30 SEP 2026 · EU AI Act, Annex III

The Financial Stability Board identifies third-party dependence and concentration, market correlations, cyber risk, and model risk, data quality and governance as the main AI vulnerabilities in finance.

CHECKED 30 SEP 2026 · Financial Stability Board, November 2024

Every one of these points the same way: keep a person accountable, keep the source visible, and do not claim more than the tool does.

What AI in finance cannot do

  • Tell you what a number means for your deal. It can extract EBITDA. It does not know that the add-backs are the owner’s house.
  • Verify itself. Extraction can misread a table. Trace the figures that drive the decision.
  • Carry accountability. The person who signs the LOI owns the answer.

Where Avise fits

Avise is deal flow software for small deal teams and search funds. It reads a CIM and extracts the financials, keeps every deal in one place with a data room and a memo builder, and costs $249 a month for the whole firm, not per seat. It does the first pass so you do the thinking; the figures link back to the pages they came from. See the product page or the pricing, and our comparison with the spreadsheet you already have.

Questions people ask about this

How is AI used in finance?
The main uses are fraud and anti-money-laundering detection, credit underwriting, trading and portfolio optimisation, financial reporting and document extraction, customer service, and, in private equity and M&A, market assessment, target screening and due diligence. The Bank of England and FCA found 75% of UK financial firms were already using AI in their 2024 survey.
Is AI used in private equity?
Yes. A Deloitte survey of 1,000 senior corporate and private equity leaders reported that 86% had integrated generative AI into M&A workflows, and Bain found 45% of M&A executives now rely on AI, more than double the prior year. Use is concentrated in market assessment, target screening and due diligence.
What are the risks of using AI in finance?
The main risks are hallucinated or inaccurate output, model risk and poor data quality, bias in credit decisions, cyber risk, and dependence on a few third-party providers. Regulators such as FINRA and the Financial Stability Board flag all of these, which is why human review of AI output remains standard.
Can AI replace a financial analyst?
Not for judgement. AI is reliable at extracting and summarising structured information from documents, and unreliable when asked to decide what a number means for a specific deal. The workable pattern is AI for the first pass and a person for the conclusion, with every extracted figure traceable to its source page.
Is using AI in finance regulated?
Yes, indirectly and increasingly. In the US, the Federal Reserve replaced its SR 11-7 model risk guidance with SR 26-2 in April 2026, and the SEC has fined advisers for false AI claims. In the EU, AI used to assess the creditworthiness of individuals is classed as high-risk under the AI Act.

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