The integration of Artificial Intelligence (AI) in finance has significantly transformed various aspects of the industry, from algorithmic trading and risk management to regulatory compliance and decentralized finance (DeFi). AI-driven models enhance market prediction accuracy, automate trading strategies, and improve fraud detection, thereby increasing efficiency and reducing financial risks. Moreover, AI-powered robo-advisors and credit scoring systems contribute to financial inclusion by offering personalized and data-driven services. Despite these advancements, challenges such as AI explainability, data privacy concerns, algorithmic bias, and regulatory constraints remain critical research areas. Additionally, emerging trends, including quantum computing, AI-enhanced DeFi, and privacy-preserving machine learning, are expected to further shape the future of AI applications in finance. This paper provides a comprehensive review of AI-driven innovations in financial markets, banking services, and regulatory compliance while discussing ongoing challenges and future research directions.