Financial institutions have long recognised the immense potential of AI, leveraging it for decades to enhance trading, risk management, and investment strategies.
But now, the game is changing.
What was once the exclusive domain of hedge funds and institutional investors is being democratized – representing one of the most significant opportunities for startups and venture capitalists in decades.
The cutting-edge AI systems that once belonged exclusively to global institutions are being packaged into apps and platforms available to everyone. And this is just the beginning.
We might be on the brink of a fully autonomous financial system overhaul, where AI all but eliminates the need for human intervention in most financial processes.
What does AI really mean for finance? How will this relationship develop in the future? What is the ultimate destination?
In this article, I examine these questions, tracing AI’s path through the investment world and its future direction.
The past: AI’s institutional dominance
AI-driven investing has long been the domain of hedge funds and institutional players, leveraging massive computational power, proprietary data, and quantitative models to optimize returns.
Renaissance Technologies’ Medallion Fund, for example, has consistently delivered staggering annualized returns of 62% through AI-based pattern recognition and high-frequency trading.
Similarly, BlackRock’s Aladdin platform uses AI for risk modelling and asset allocation, serving as a cornerstone for institutional investors.
These systems were designed to outperform human traders and analysts, and they succeeded. AI systems don’t get tired. They don’t trade on emotion. They scan markets at speeds no human could match, adapting instantly to price swings.
Take Galileo FX, for example. This trading bot reportedly turned a $3,200 investment into a 500% return – in a single week.
With a 72% win rate and a 3.2 profit factor, some observers believe it’s pushing the limits of what’s possible in automated trading. It’s not just stocks – AI is making millionaires in crypto, too.
A bot named Tee Hee Hee apparently flipped $1,500 into $1.88 million by trading a Solana-based token ($TEE).
While these numbers remain primarily unverified, even a fraction of such performance would be tectonic for financial markets.
Compare this to conventional investing wisdom. A skilled human investor aims for 5-10% annual returns to beat inflation and something like the S&P 500. If AI can outpace that – consistently – the goalposts will move.
Present day: the democratization of institutional-grade AI
Today, we’re witnessing a seismic shift.
The cutting-edge AI systems that once belonged exclusively to global institutions are being packaged into apps and platforms available to everyone.
This democratization is a game-changer, and I believe it’s one of the most exciting developments in fintech.
Over the next 3-5 years, fintech startups will bridge this gap, bringing hedge-fund-grade AI to retail investors.
I see this as an inflection point for AI-driven consumer fintech and there are several startups already making their impact:
- Alpaca offers an AI-powered, commission-free trading API.
- Composer lets users automate portfolio management through a no-code interface.
- AI-driven platforms like Tifin, Betterment, and Wealthfront already offer personalized, efficient, and cost-effective solutions, democratizing access to strategies once reserved for HNWIs.
The impact is particularly evident in wealth management, where traditional advisors and firms face unprecedented disruption.
For decades, wealth management relied on human expertise, personal relationships, and often biased product offerings.
But why pay high fees to a traditional firm when AI-powered platforms can process billions of pages of information, design unbiased strategies, and adapt in real-time?
As these platforms mature, they will erode the dominance of traditional firms, especially among younger, tech-savvy investors who value transparency, affordability, and convenience.
The wealth management industry is on the brink of transformation, and AI is propelling it forward.
2025 to 2028: AI as the financial command center
Today, most consumers manage their finances through a fragmented mix of apps and services – one for banking, another for budgeting, a third for investing, and so on.
As AI evolves, these distinct categories will converge into unified platforms that serve as the operating system for our financial lives.
Imagine a single AI that manages your investment portfolio and helps you budget, automates your savings, optimises your taxes, and even boosts your credit score.
We’re already observing the first players establish themselves in this nascent market, with products blurring the lines between once-distinct financial services:
- Zeta: This AI-powered platform is designed for modern families, helping couples manage joint accounts, track shared expenses, and work towards financial goals together. By leveraging AI to analyze spending patterns and automate financial tasks, Zeta simplifies the complexities of shared finances.
- Cleo: Targeting Gen-Z users, Cleo is a digital financial assistant that uses AI to provide personalized budgeting advice and automate savings. Through a conversational interface, Cleo helps users track spending, set goals, and build healthier financial habits. The company has seen rapid growth, with revenues reaching $65.9 million in 2023, up 121% from the previous year.
- Qapital: Qapital’s AI-driven platform uses behavioural economics principles to help users save money effortlessly. By setting customized saving rules and goals, users can automate their savings based on their lifestyle and spending habits. Qapital’s AI analyzes a user’s financial data to create personalized recommendations and adjust saving strategies over time.
As these startups grow and others join them to carve their niches, they’ll progressively change how AI integrates into financial management, making advanced financial automation the norm.
2030/2035 and beyond – The death of money: AI as your autonomous economic avatar
Looking ahead to 2035 and beyond, AI could take on a much deeper, more profound role in managing finance.
AI-driven financial agents will engage in financial transactions autonomously: negotiating contracts, executing transactions, interacting in digital markets, and handling complex financial strategies.
This vision isn’t just about convenience; it’s about redefining wealth creation. AI-driven “financial avatars” could democratize access to sophisticated financial strategies, levelling the playing field for retail investors and small businesses.
For businesses, these agentic AI avatars could handle complex supply chain negotiations, seeking out deals and optimizing for efficiency. On a governmental level, they could be used to allocate resources and manage public funds.
However, this future also raises important questions about regulation, transparency, and control.
The late Professor Stephen Hawking once warned that AI could “outsmart financial markets, out-manipulate human leaders,” and there are many practical problems to solve to make widespread autonomous financial systems function for collective benefit.
One possible answer – a tool that can help humans keep AI finance tech on-side – lies in combining AI with decentralized finance (DeFi) and Web3 technologies.
DeFi and Web3 enable transparent, open markets through blockchain networks and smart contracts. By integrating AI into these ecosystems, startups can create self-regulating financial systems that are both powerful and accountable.
It’s an exciting, rapidly growing field. The global Web3 market was valued at $2.25 billion in 2023 and is expected to grow at 49.3% annually until 2030. DeFi is similarly projected to reach $42.76 billion in 2025, up from $30.07 billion in 2024.
AI is already integrating with DeFi technologies and services to create self-regulating financial ecosystems. AI becomes part of the financial infrastructure itself.
Imagine an AI-driven lending platform built on a blockchain, where borrowers and lenders interact directly. AI algorithms assess credit risk, set interest rates, and manage collateral – all without intermediaries. The transparency of the blockchain ensures every decision is traceable, while the AI ensures efficiency and adaptability. In this way, AI becomes part of the financial infrastructure itself.
While risks remain, DeFi could provide the necessary checks and balances to prevent AI-driven finance from spiraling out of control.
The future belongs to AI-driven fintech
The financial tools once exclusive to global institutional players are now becoming available to everyone through mobile apps.
What’s remarkable is how ordinary this seems already. When people use their finance and investment apps, they often don’t see themselves using AI – they’re simply managing their money with modern tools.
Companies that build the most intuitive interfaces for these powerful tools – whether through SaaS platforms, APIs, or AI-first investment products – will likely capture enormous value as AI continues to transform how people manage money.
As AI progresses, highly complex, agentic AI systems will start to operate autonomously of ourselves – even acting as our avatars – making financial decisions, completing transactions, and generating wealth automatically.
While seemingly distant today, it will eventually force us to reconsider fundamental questions about wealth, markets, and the nature of money itself.
For startups and VCs, this is the moment to act. By democratizing access to institutional-grade AI, building unified financial platforms, and addressing the ethical challenges of autonomous systems, entrepreneurs and investors can shape a more inclusive, efficient, and innovative financial future.
The question is no longer if AI will transform finance – it’s how quickly we can seize this opportunity.
(Ilina Rai-Sia is Principal at Kinetic Investments, where she backs AI-native consumer startups transforming everyday experiences. She previously founded Radicle Ventures, investing in early-stage deep tech startups, and has worked across consulting, impact investing and venture roles globally.)
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