Blockchain and AI in Finance

Abstract

Blockchain and artificial intelligence (AI) are reshaping the financial landscape by improving security, operational efficiency, and intelligent automation. Blockchain&s;s decentralized and tamper-proof ledger fosters transparency and trust in financial transactions, while AI enhances decision-making through advanced data analysis, fraud detection, and risk management. Together, their convergence supports a wide range of applications, including decentralized finance (DeFi), asset tokenization, algorithmic trading, and robo-advisory services. Blockchain provides a secure infrastructure for AI-driven financial innovations by ensuring data integrity and minimizing dependence on intermediaries. In parallel, AI improves blockchain performance by automating smart contracts, refining predictive models, and streamlining compliance mechanisms. To better understand and structure this integration, the chapter introduces the Techno-Financial Synergy Framework (TFSF), which connects the technological enablers, strategic drivers, and outcomes of AI-blockchain convergence. While the synergy holds great promise, it is also accompanied by challenges such as computational overhead, scalability constraints, interoperability gaps, and evolving regulatory landscapes. However, emerging solutions such as zero-knowledge proofs, homomorphic encryption, and next-generation consensus protocols are gradually addressing these limitations. As these technologies continue to evolve, their convergence is expected to drive the next phase of digital financial transformation, fostering a smarter, more secure, and inclusive financial ecosystem.