Technology Finance丨The Application of Artificial Intelligence in Finance

liu, tempo Date: 2021-07-16 11:33:23
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In the summer of 1956, scientists such as McCarthy and Minsky first proposed the concept of “Artificial Intelligence (AI)”, marking the birth of the discipline of artificial intelligence. In 2016, as Alpha Dog defeated the world champion in the Go man-machine battle, artificial intelligence attracted widespread attention around the world. Later, because of the popularity of voice assistants and smart robots on smart phones, artificial intelligence gradually entered our lives. But this is just the “container” of artificial intelligence, not artificial intelligence.


Artificial intelligence is an imitation of human intelligence and strives to achieve certain tasks. It is the study of basic theories, methods and techniques for using computers to simulate human thinking activities and intelligent behaviors such as learning, thinking, and reasoning. Currently, more mature artificial intelligence technologies include image processing, speech recognition, and natural language processing.


With the continuous development of science and technology, fintech technologies such as artificial intelligence and big data have become the focus of attention of all countries.


At present, all walks of life are exploring the possibilities of artificial intelligence. Among them, the financial field has become one of the best application fields of artificial intelligence due to its wide application of scientific and technological means, early start of information construction, and high rate of return on investment in new technologies.

 Artificial intelligence in finance

In recent years, Country’s artificial intelligence market has developed very rapidly, and AI is at different stages of development in different industries, among which the financial sector is in a leading position in terms of underlying infrastructure and application maturity. At present, the “AI+”-led industry intelligence promotion is in its infancy, and the application of artificial intelligence in various industries, especially the financial industry, still has a lot of room for in-depth exploration.


The focus of financial technology is two: one is empowerment and the other is risk control. On the one hand, it focuses on the application of science and technology in the financial field to promote the financial industry to better serve the real economy and improve the quality of financial products and financial services; another very important aspect is to control financial risks.
Strong cooperation between artificial intelligence and finance


1. Artificial intelligence + financial investment and services


Artificial intelligence is currently widely used in financial investment and service fields. In the field of financial investment, artificial intelligence has applications in such directions as robo-advisory, anti-fraud, and investment forecasting. In the service field, artificial intelligence has applications in the direction of identity recognition and intelligent customer service. The combination of artificial intelligence technology with financial investment and service fields helps standardize, model, and intelligentize financial investment and services, greatly upgrade and optimize the existing service model of the financial industry, and maximize the protection of consumer income requirements and reduce The occurrence of financial risk events is reduced, labor input costs are reduced, and work efficiency is improved.


2. Artificial intelligence + risk control


The development stage of financial technology represented by “Internet + finance” is more of a “channel revolution”, so the impact of the new generation of “AI + finance” includes two aspects: products and risk control-making products more intelligent and risk control safer.


Due to its technical attributes, artificial intelligence has more advantages in identifying and responding to systemic financial risks. At present, both internationally and domestically, artificial intelligence is actively applied to risk control and financial supervision, in order to reduce financial risks as much as possible and explore more effective regulatory paradigms.


At present, some international regulatory agencies, such as the Australian Securities and Investments Commission (ASIC), Singapore Monetary Authority (MAS) and the United States Securities and Exchange Commission (SEC), are using artificial intelligence to identify suspicious transactions, such as identifying and extracting evidence from documents Stakeholders analyze the user’s transaction trajectory, behavioral characteristics and related information, and crack down on criminal activities such as underground money laundering faster and more accurately.


In terms of financial supervision, the application of artificial intelligence realizes real-time monitoring of financial supervision, which can be suspended at any time. In practical applications, when the financial activities of certain financial institutions exceed the red line prescribed by the regulatory authority, the artificial intelligence automatically connects to the interface of the regulatory authority to identify the business that does not meet the requirements and stop the business at the first time, and Generate relevant reports for use. When the suspended financial business indicators return to normal levels, the system can also cancel the lock in time and resume business processing, thus realizing real-time monitoring.


Changes and risks of artificial intelligence


Artificial intelligence technology is becoming more and more mature, relying on the research results of artificial intelligence technology such as speech recognition, robotics, machine learning, face recognition, etc., began to move towards the industrial end. The three elements of artificial intelligence applications: data, the ability to process data, and business realization scenarios. The supply chain finance field already has the necessary conditions for the rapid development of artificial intelligence. In fact, actively embrace artificial intelligence and embrace the benefits brought by artificial intelligence. The application of AI in finance has a broad market space.


After the cold winter of the 1990s and early 2000s, artificial intelligence is recovering. The development of artificial intelligence has been fully proven in the financial industry. As early adopters of emerging technologies, banks and other financial service providers are quickly embracing artificial intelligence.


Due to the application of artificial intelligence, Autonomous predicts that the financial industry can save up to $1 trillion in funds. Leading the wave of artificial intelligence in the financial sector are financial technology companies, most of which directly or indirectly cooperate with financial industry companies to create real artificial intelligence applications.


1. Artificial intelligence realizes the credit risk control model.


The core of artificial intelligence is the ability of big data risk control modeling. In traditional credit investigation, data relies on bank credit data, and big data not only includes traditional credit data, but also includes some descriptive risk characteristics related to consumers’ repayment ability and willingness to repay. Using big data technology, many data dimensions can be collected to describe, as an important basis for risk assessment. In this way, big data credit investigation does not rely solely on traditional credit data, it can conduct credit investigation for people who cannot be served by traditional credit investigation, and achieve coverage of the entire consumer population.


2. Artificial intelligence realizes risk control and anti-fraud.
In a complex market economy, there are various uncontrollable potential risks in the complex trade relationship between core enterprises and suppliers. The graph network in machine learning solves this demand well. It builds a huge network graph based on various information nodes such as applicants, mobile phone numbers, devices, and IP addresses, and can perform rules-based and machine-learning reactions on top of this real-time recognition of fraud models. One of the more common cases is that artificial intelligence can monitor which lending websites the relevant device ID is registered on, and whether the same device has downloaded multiple lending apps. It can detect signs of multiple loans in real time and minimize the risk.
From the overall atmosphere, the financial industry has not yet fully accepted AI technology. On the one hand, it may be that AI’s performance in the industry is not good. It uses a much more complex model, but it is difficult to make better results. On the other hand, there is still the issue of risk control. The financial industry, especially quantitative trading, has extremely strict risk control. The most important requirement for models is robustness and strong interpretability. The risk of AI is difficult to measure and control.


The next iteration of artificial intelligence in finance
Artificial intelligence in finance is a broad and fast-develo


ping trend. One thing in common among all these startups is that they are using artificial intelligence to meet the challenges facing the financial industry today. It is clear that artificial intelligence is helping to simplify current processes and increase efficiency.


The next iteration of artificial intelligence will introduce brand new services and solutions, thereby subverting current financial services. Such subversion may include the complete elimination of fraud (subversion of fraud tracking services), instant credit (subversion of credit model services), autonomous and personalized financial advisors (subversion of financial consulting services), etc.


It is generally believed that artificial intelligence has three development stages: computational intelligence, cognitive intelligence, and perceptual intelligence. The first stage is computational intelligence, which can save and calculate, such as the personal computers we use now; the second stage is cognitive intelligence, which can speak and listen, see and recognize, and be able to perceive various types of input data and processing; the third stage is also the highest stage at present. It is perceptual intelligence, which requires machines or systems to understand and think. This is the goal that the field of artificial intelligence is striving for.


At present, the application of artificial intelligence in the financial industry only stays at the level of financial electronics (computational intelligence, cognitive intelligence) such as algorithms and data processing. Financial intelligence (perceived intelligence) requires further technological development. As computer scientist Donald Knuth said, “Applications in the financial field are mainly limited to some cognitive tasks, and for some more complex tasks involving the field of perception, people need to understand, think and reason. Artificial intelligence has It surpasses humans in almost all areas that require thinking, but it is still far from what humans and other animals can accomplish without thinking.”


Future outlook


In the next few years, more startups are expected to launch these breakthrough artificial intelligence applications in the financial sector.


With the empowerment of AI technology, the transformation of global corporate competition, and the urgency of transformation and upgrading within the industry, new finance will be a lasting one, whether it is in the general development of the times or driven by social and economic development. For the “gold” industry, there is no doubt that a new financial feast for the Nuggets is coming. Those who win the trend will win the world.

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