This systematic literature review explores the transformative role of artificial intelligence (AI) in the financial sector, highlighting its impacts on risk management, trading, investment strategies, and customer service. While AI technologies significantly enhance operational efficiencies and market capabilities, they also introduce complex challenges such as data psomrivacy, security risks, and algorithmic biases. The review synthesizes findings from recent studies to outline the dual narrative of opportunities and hurdles presented by AI in finance. It discusses the implications for practitioners, who can leverage AI to improve decision-making and operational efficiency, and for policymakers, who are tasked with creating regulatory frameworks that balance innovation with risk mitigation. The paper concludes with recommendations for future research, emphasizing the need for longitudinal studies, exploration of socio-economic impacts, and development of ethical AI deployment practices in financial services. This review aims to provide a comprehensive understanding of AI’s role in finance, guiding future academic and practical endeavors in the field.