With the continuous burst of scientific and technological innovation, the use of technology to promote industrial development and accelerate the digital transformation and upgrading of the economy and society has become a global consensus.
Among them, financial technology has become a recent concern of society. The integration of finance and technology has created new business models, applications, processes and products, spawned new customer relationships, and has had a profound impact on financial institutions, financial markets, and financial services. Fintech has been continuously discussed in the past 2020 because of the entry and layout of Internet giants.
The development of financial technology is inseparable from the development of the underlying technology, and artificial intelligence, as an important driving force for the new round of technological revolution and industrial transformation, plays an irreplaceable role in the process of financial technology. It can be said that the deep integration of artificial intelligence technology and the financial industry is the general direction of financial technology. The use of machines to replace and surpass part of human management experience and capabilities will also lead to future financial model changes.
Smart finance is an advanced form of financial technology development. It is an upgrade and transformation based on digitalization. It is a future development trend and will become the core competitiveness of the financial industry. However, while smart finance leads the fundamental subversion of financial production, it also continues to challenge the existing laws, ethics, and order of society, and urgent responses are needed.
Smart Finance Leads the Fundamental Subversion of Financial Production
At present, artificial intelligence has been embedded in all aspects of social life, and it is naturally coupled with finance. The development of smart finance will help the country to seize the opportunities of artificial intelligence development and occupy the commanding heights of technology, especially the particularity of the financial industry. It will inevitably put forward new requirements and challenges to artificial intelligence technology, so as to promote the breakthrough and breakthrough of artificial intelligence technology in my country. Upgrade to improve the efficiency of technological transformation. The significance of artificial intelligence and finance is self-evident.
At the same time, artificial intelligence technology comprehensively uses financial technology’s big data, cloud computing, blockchain and other technologies to provide unlimited possibilities for the future development of the financial industry. It is an evolution and upgrade of the existing financial technology applications, and will greatly affect the development of the financial industry. Will produce disruptive changes.
The development of smart finance will help strengthen the adaptability, competitiveness and inclusiveness of the financial industry, greatly improve the ability and efficiency of financial institutions to identify, prevent and control risks, promote structural reforms on the financial supply side of my country, and enhance financial services to the real economy and the ability of the people to live.
In addition, compared to Internet finance and financial technology, the more revolutionary advantage of smart finance lies in the fundamental subversion of financial production efficiency. Although artificial intelligence is highly dependent on big data and cloud computing, but different from the application of deep data mining, artificial intelligence technology systems use sensors to imitate human senses to obtain information and memory, and use deep learning and algorithms to imitate human logic and reasoning capabilities. The machine replaces the human brain to process massive amounts of data quickly, thus surpassing the work of the human brain. This will also meet various financial needs more accurately and efficiently, and promote the reform and leapfrog development of the financial industry.
Judging from the development of intelligent finance at this stage, in the foreground application scenarios, artificial intelligence is already moving towards changing the way financial service companies acquire and maintain customers. Although financial service companies have made effective attempts to use data, artificial intelligence still provides opportunities for major innovations in the market, including intelligent marketing, intelligent customer service, and intelligent investment advisory.
For example, robo-advisors use artificial intelligence algorithms to automatically generate personalized asset allocation recommendations for users based on investors’ risk preferences, financial status, and income goals, combined with financial models such as modern investment portfolio theory, and achieve continuous tracking and integration of portfolios with dynamic rebalance adjustment. At present, there have been trials of robo-advisors nationwide, and comprehensive promotion needs to be explored.
Compared with traditional manual investment advisory services, robo-advisors have incomparable advantages: firstly, they can provide a wide range of efficient and convenient investment advisory services; secondly, they have low investment thresholds, low fees and high transparency; thirdly, they can overcome investment subjective and emotional, to achieve a high degree of investment objectification and decentralization; fourthly, to provide personalized wealth management services and rich customized scenarios.
Artificial intelligence is not only suitable for front office work, it also provides exciting changes for middle office and back office. Among them, smart investment is beginning to gain profitability and has great development potential. Some companies use artificial intelligence technology to continuously optimize algorithms, enhance computing power, achieve more accurate investment forecasts, increase returns, and reduce tail risks. Through portfolio optimization, significant excess returns have been achieved in the real market, and the future development potential of smart investment is huge.
Smart credit evaluation has the advantages of online real-time operation, automatic system judgment, and short review period. It provides a more efficient service model for small and micro credit, and has also been widely used in some Internet banks. Intelligent risk control is implemented in bank corporate credit, Internet financial assistance, credit review in consumer finance scenarios, risk pricing and collection links, providing the financial industry with a new risk control model based on online business.
Although artificial intelligence integrated finance is still in the primary development stage of “shallow application”, focusing on the implementation of intelligent transformation of process and repetitive tasks, the application of artificial intelligence technology is in the stage of penetration of the financial business into the core. The development potential has been demonstrated, and the advancement of industrial intelligence technology will inevitably bring complete automation of customers’ financial life in the future.
Risks and challenges, responses and initiatives
Artificial intelligence integrated finance has allowed the original financial service system to enter the era of “human” services to “machine” services. However, while intelligent finance has brought endless surprises and expectations to the industry, it also continues to challenge existing laws and ethics. And order.
For example, the possibility of investors losing money due to data quality or algorithm flaws. Among them, smart finance relies on algorithms, and procedural errors such as over-fitting in algorithms may trigger a butterfly effect and cause systemic risks.
At the same time, the “tail effects” and “network effects” of smart finance enable financial institutions to enhance customer acquisition capabilities, improve risk control levels, and reduce costs. However, the superposition of the two effects increases the complexity of the financial system, which may be amplified. The contagion and impact of risks induce a greater “herding effect” and amplify the procyclicality of finance.
In addition, financial decision-making relies on the intelligent processing of big data. The risk of leakage of personal investment information or sensitive company data has made personal privacy protection and data security issues prominent. The opacity of the algorithm brings the possibility of discrimination. When the data is incomplete, unrepresentative, or biased, it will affect the decision-making results. Therefore, financial institutions are obliged to understand the artificial intelligence system and the potential negative impact that it may have on customers, and are responsible for the discrimination caused by algorithms.
Facing the problems brought by the application of smart finance, it is necessary for the government, the market and society to form a diversified and multi-level governance force to reduce the risks of smart finance, maximize the liberation of productivity brought by artificial intelligence technology, and enjoy the results of scientific and rational decision-making. .
On the one hand, smart finance needs to abide by the general principles of artificial intelligence governance. At the same time, it must consider the particularity of applications in the financial field, and insist on both innovative applications and risk prevention. One is to encourage and support the innovation of artificial intelligence technology and financial industry models, and the other is to adopt effective regulatory measures.
From a trend point of view, supervision will continue to adhere to the policy of tightening and innovation, maintaining strict supervision over the business scope and data specifications of financial technology companies, and holding a cautious attitude towards new technologies and new models. Technology companies will leave the financial services business and focus more on technology output, and the era of disconnection between the market and the supervision will be gone forever.
Many institutions around the world have begun to study corresponding countermeasures to deal with the ethical issues of smart finance. The Bank of America established a committee to study how to ensure user privacy. Google recommends adopting a human-centered design approach, using a variety of indicators to evaluate and monitor, and extensively examine the data situation to find possible sources of deviation. The Canadian Ministry of Finance issued a guidance document that outlines the quality, transparency, and public accountability of the use of artificial intelligence.
The development of smart finance requires clear guidelines and safeguards to ensure the reasonable development and use of the technology, including algorithm fairness, interpretability, and robustness.
Intelligent financial application institutions must ensure that employees responsible for processing data or developing, verifying, and supervising artificial intelligence models have valid qualifications and experience, understand the social and historical deviations that may exist in the data, and how to adequately correct these deviations. Financial institutions also need to build internal policies and management mechanisms to ensure that algorithm monitoring and risk mitigation procedures are adequate and transparent, and are regularly reviewed and updated.
The future of financial services lies in its ability to fully apply and benefit from new technologies. Artificial intelligence is a new technology that will bring about subversive changes in the front and back of financial service companies, produce major changes in the structure and supervision of the financial market, and present major challenges that urgently need to be resolved in terms of social ethics and morality.
Understanding and accepting artificial intelligence will inevitably go through a long-term spiral process. This is a process that is affected by economic, social and political changes, and it is also a process that no company can complete alone. Therefore, only collaborative efforts can overcome these challenges and unlock the greatest benefits that artificial intelligence can bring to enterprises and society.