Abstract
A paradigm shift in the financial services industry, commonly known as Finance 4.0, is characterized as a transition towards data-driven forms of Artificial Intelligence (AI) and Machine Learning (ML) as opposed to the traditional econometric forecasting. The paper explored how superior predictive models can be developed and implemented in the areas of Financial Planning and Analysis (FP&A), stock market forecasting, and risk management. While models such as ARIMA and linear regression have been historically used as the foundation of financial analytics, they have not been able to represent non-linear relationships and high-frequency volatility that are common in modern markets. This study has summarized current developments in Deep Learning, namely Long Short-Term Memory (LSTM) networks and Convolutional Neural Networks (CNN), and shown that they are better at sequential financial time-series data processing. Moreover, we looked at how Random Forests and Gradient Boosting can be used to assess credit risks and detect fraudsters, and how they can be used to reduce Mean Squared Error (MSE) and maximize the predictive power. The paper also addressed the essential inclusion of Explainable AI (XAI) to overcome the so-called black box dilemma and guarantee regulatory adherence and trust in the stakeholders. Combining the results of bibliometric and empirical case studies, such as S&P 500 forecasting and Asset and Liability Management (ALM), the paper provided a comprehensive framework on how AI can be used to optimize decision-making and guarantee financial stability and operational efficiency in a rapidly evolving economic environment.
Keywords
Artificial Intelligence (AI), predictive modelling, deep learning, Long Short-Term Memory (LSTM), Financial Planning and Analysis (FP&A), explainable AI (XAI), risk management, algorithmic trading, FinTech.
Citations
IRE Journals:
Chidere Amaka Maureen "Advances in Artificial Intelligence for Financial Predictive Modeling and Analytics" Iconic Research And Engineering Journals Volume 9 Issue 7 2026 Page 1827-1831 https://doi.org/10.64388/IREV9I7-1713729
IEEE:
Chidere Amaka Maureen
"Advances in Artificial Intelligence for Financial Predictive Modeling and Analytics" Iconic Research And Engineering Journals, 9(7) https://doi.org/10.64388/IREV9I7-1713729
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