Financial Scenario under Artificial Intelligence Reconstruction

Summary: From the financial field, the main application of AI in international banking industry focuses on capital operation, market analysis, customer marketing, risk supervision and so on. Intelligent Customer Service, Intelligent Investment, Intelligent Quantitative Transaction... Artificial intelligence has a huge development space in the financial field, but it also makes supervision more complex.

In recent years, the rapid development of China's artificial intelligence industry is ushering in the overall planning and overall guidance at the national level. In July 2017, the State Council issued the New Generation of Artificial Intelligence Development Plan (hereinafter referred to as the Plan). Once the Plan was released, it attracted worldwide attention. So, what is the future of AI in China? How does it apply in the financial field? What challenges will the regulatory system face? This paper intends to explore these issues.

I. Application of Artificial Intelligence in Finance

1. Application in International Financial Industry

In recent years, the global financial industry is quietly changing under the catalysis of artificial intelligence. According to the report of the Financial Stability Board (FSB), the application of AI in international banking industry mainly focuses on the following aspects.

(1) facing capital operation, focusing on asset allocation, investment and research consultants, quantitative transactions, etc.

The application of AI in financial investment consultant is usually called intelligent investment consultant, which mainly refers to providing online investment consultant and asset management service based on Algorithm for customers. Specifically, it can be divided into three categories: one is the large-scale asset allocation intelligent investment which is applied in the front end of sales, mainly to solve the large-scale asset allocation problems for customers through user analysis, such as Wealthfront; the other is the investment research intelligent investment which is applied in the stage of investment analysis, mainly through massive data mining and logical chains to solve the investment research problems, such as Kensho; the third is the application strategy. Intelligent Quantitative Trading System (QTS) for trading and analysis is mainly used to replace traders by artificial intelligence in investment transactions, such as all-weather artificial intelligence trading of WaterBridge. Statista, a statistical company, predicts that in 2017, the size of the U.S. smart investment management assets will reach 22.4802 billion U.S. dollars and 509.555 billion U.S. dollars by 2021, with an annual compound growth rate of 29.3%.

(2) Market-oriented analysis, focusing on trend forecasting, risk monitoring and stress testing.

Artificial intelligence technology can obtain more information from scattered historical data, help to identify non-linear relationships, give market forecasts (price fluctuations) and their timeliness, thus bringing higher returns directly or indirectly. In addition, AI technology can also analyze large, semi-structured and unstructured data sets, take into account changes in market behavior, regulatory rules and other trends, and conduct reverse testing, model validation and stress testing to avoid underestimating risks and improve transparency. For example, Rebellion, the world's first pure AI-driven fund, predicted a stock market crash in 2008 and gave Greek bonds a F rating in September 2009, one month ahead of Fitch. Senoguchi, a machine invented by Mitsubishi, Japan, predicts whether the Japanese stock market will rise or fall in 30 days on the 10th of each month. After four years of testing, the accuracy of the model is as high as 68%.

(3) Customer-oriented marketing, focusing on identity recognition, credit evaluation and virtual assistants.

Artificial intelligence technology has been widely used in the financial front-end, large-scale customer data is imported into the chat program, so that it can "face-to-face" for customers to communicate in natural language, improve the "customer" ability. In April 2017, Wells Fargo Bank began to pilot a chat robot project based on Facebook Messenger platform. Virtual assistants provide account information and help customers reset passwords by communicating with users. Erica, Bank of America's intelligent virtual assistant, is also officially on the show. Users can use voice and text to interact with Erica. Erica can help users query credit scores and check consumption habits. With the change of bank's current revenue and expenditure, more than 45 million customers can provide repayment suggestions, financial guidance and so on. In addition, HSBC has used face and voice-based biometric technology to verify consumer identity; Royal Bank of Scotland has used "LUVO" virtual dialogue robots to obtain the most suitable housing loans for customers, etc., in order to become "trusted financial consultants" for users.

(4) Facing financial supervision, it concentrates on identifying abnormal transactions and risk subjects.

Artificial intelligence technology can be used to identify abnormal transactions and risk subjects, detect and predict market fluctuations, liquidity risks, financial pressures, housing prices, industrial production, GDP and unemployment rate, and seize possible threats to financial stability. At present, some international regulators, such as the Australian Securities and Investment Commission (ASIC), the Singapore Monetary Authority (MAS) and the United States Securities and Exchange Commission (SEC), are using artificial intelligence to identify suspicious transactions. Specific measures include identifying and extracting interest subjects from evidence documents, analyzing users'transaction trajectory, behavior characteristics and related information, and cracking down on underground money laundering more quickly and accurately.

2. The Application of Financial Industry in China

In China, the banking industry has also followed the pace of international banking industry and started to explore the application of artificial intelligence technology. Among them, Internet Finance Corporation has taken the lead in the research and application of artificial intelligence. For example, Ali's Ant Golden Clothes has applied artificial intelligence to Internet lending, insurance, credit reporting, asset allocation and customer service and achieved good results. Tencent's excellent totem is a totem

Please read the Chinese version for details.