AI in Fintech

Question 1

Why is deep learning called “deep”?

Answer 1

Neural architectures have many layers, with a layered feature extractor as the key feature.

Question 2

What is concept drift in predictive analytics?

Answer 2

Statistical properties of the target variable change over time unpredictably, reducing model accuracy.

Question 3

What does “concept” mean in concept drift?

Answer 3

The quantity to be predicted, typically the target variable (e.g., FRAUDULENT in fraud detection).

Question 4

Give an example of concept drift in fintech.

Answer 4

Predicting weekly merch sales; model accuracy drops due to changing customer behavior, like seasonal shopping trends.

Question 5

How does seasonality contribute to concept drift?

Answer 5

Shopping behavior changes seasonally (e.g., higher sales in winter holidays vs. summer), affecting model predictions.

Question 6

What tests detect concept drift?

Answer 6

Dicker-Fuller Test, Moving Window ID3.

Question 7

Why is training strategy important with concept drift?

Answer 7

Models must adapt to changing data patterns to maintain accuracy.

Question 8

What is the AI singularity?

Answer 8

Hypothetical point where AI growth becomes uncontrollable, leading to rapid self-improvement and superintelligence.

Question 9

What is an intelligence explosion?

Answer 9

A runaway cycle of AI self-improvement, creating increasingly intelligent generations rapidly, surpassing human intelligence.

Question 10

What is AI in fintech?

Answer 10

Umbrella term for technologies like ML and NLP, enhancing banking/finance processes.

Question 11

What is the estimated economic impact of AI in fintech?

Answer 11

Potential to save over $1 trillion, primarily through reduced salary costs.

Question 12

How does AI affect employment in fintech?

Answer 12

Shifts jobs by augmenting humans, freeing them for value-adding tasks, but may reduce entry-level roles.

Question 13

What is Fintech Intelligence (FI)?

Answer 13

AI applications in fintech, rapidly growing in areas like automation and analytics.

Question 14

What are the foundational technologies for AI in fintech?

Answer 14

Machine Learning (ML) and language manipulation (NLP, NLG).

Question 15

How does ML benefit fintech?

Answer 15

Processes large datasets, spots patterns, and draws insights that may remain undiscovered.

Question 16

What is NLP in fintech?

Answer 16

Technology using human communication as input to prompt computer activity.

Question 17

What is NLG in fintech?

Answer 17

Produces human-quality prose from large datasets, as speech or reports summarizing financial results.

Question 18

How does AI reduce costs and errors in fintech?

Answer 18

Shifts tasks to AI, speeds up responses, and automates report preparation.

Question 19

How does AI mitigate risks in fintech?

Answer 19

Improves loan underwriting, fraud detection, compliance, and document accuracy using ML.

Question 20

How does AI enhance revenue and customer experience?

Answer 20

Targeted offers, speech analytics, and employee focus on high-value tasks improve sales and satisfaction.

Question 21

Why is AI in fintech booming now?

Answer 21

Survived disillusionment cycles; technologies like big data, neural networks, and ML enable deeper data analysis.

Question 22

How does AI provide a competitive edge in fintech?

Answer 22

Enables faster, data-driven decisions, outperforming competitors using advanced analytics.

Question 23

What are common backend AI applications in fintech?

Answer 23

Regulatory compliance, fraud detection, AML, KYC, credit scoring automation.

Question 24

What are visible AI applications in fintech?

Answer 24

Robo-advisors and customer care chatbots.

Question 25

How does AI currently function in fintech?

Answer 25

Augments humans rather than replacing them, enhancing efficiency and decision-making.

Question 26

How is text-based chat used in fintech?

Answer 26

Delivers personal assistant-like expertise, scaling human impact via AI-driven human-like interactions.

Question 27

What is an analytical competitor in fintech?

Answer 27

A company using enterprise reporting and predictive analytics for all decisions, outperforming peers.

Question 28

What is economic shock modelling in fintech?

Answer 28

AI-driven complex models, often using GPUs, to simulate what-if scenarios for governments, NGOs, and corporations.

Question 29

How does AI-driven analytics benefit banking?

Answer 29

Analyzes vast data for patterns, improving risk modeling, fraud detection, and credit underwriting.

Question 30

What is an example of humanoid robots in banking?

Answer 30

Softbank’s Pepper recognizes emotions, assists customers, and recommends products, popular in Japan.

Question 31

What are chatbots in banking?

Answer 31

AI-powered services interacting with customers in a human-like manner, e.g., Bank of America’s financial guidance chatbot.

Question 32

What is RPA in banking?

Answer 32

Automates routine human tasks accurately using software robots, processing inputs and applying rules.

Question 33

What is JPMorgan’s COiN platform?

Answer 33

AI platform analyzing legal documents, extracting information faster than humans.

Question 34

How does NLG aid report generation in fintech?

Answer 34

Turns data into prose summaries, e.g., Norwegian News Agency’s 99% accurate automated football coverage.

Question 35

How does AI improve decision-making in fintech?

Answer 35

Data-driven decisions at lower cost, enabling leaders to ask machines for recommendations.

Question 36

How does AI enhance customer support in fintech?

Answer 36

Chatbots and voice systems deliver human-like service/expertise at low cost.

Question 37

How does AI improve fraud detection in fintech?

Answer 37

Analyzes behavioral patterns to identify fraud, adapting to new cases with self-learning algorithms.

Question 38

How does AI streamline claims management?

Answer 38

Automates handling, fast-tracks claims, and identifies fraudulent patterns, reducing costs and enhancing customer experience.

Question 39

How does AI improve insurance management?

Answer 39

Automates underwriting, links datasets to avoid costly tests, and prevents risks to reduce damages.

Question 40

What are robo-advisors in fintech?

Answer 40

Automated financial assistants monitoring markets and recommending stock/bond trades based on user goals.

Question 41

How does predictive analytics impact financial services?

Answer 41

Enhances strategy, sales, and resource optimization by predicting customer behavior and credit risks.

Question 42

How does AI prevent fraud in banking?

Answer 42

Analyzes suspicious activity, distinguishes bots from humans, and detects compromised credentials.

Question 43

How does Netflix use ML in a non-fintech context?

Answer 43

Personalizes genres based on recent plays, ratings, and taste preferences.

Question 44

How does CONCURED use AI in content marketing?

Answer 44

Analyzes data to identify trends, promotes content on social media, and tracks performance transparently.

Question 45

What are the employment concerns with AI in fintech?

Answer 45

Potential job displacement, particularly for lower-paid workers, though new jobs may emerge.

Question 46

What is job polarization caused by AI?

Answer 46

Middle-income jobs decline, increasing competition for manual labor and benefiting highly educated workers.

Question 47

What percentage of UK jobs are highly automatable?

Answer 47

10-30%, with new jobs potentially created over time.

Question 48

What percentage of UK business leaders invested in AI in 2017?

Answer 48

14%, higher than the 9-12% across 10 advanced economies.

Question 49

How should businesses address AI-driven workforce changes?

Answer 49

Train workers as digital citizens, ensure income security, and tackle algorithmic biases.

Question 50

What is the current impact of AI in financial institutions?

Answer 50

Chief AI Officers, AI labs, banking bots, intelligent investment products, and CFA exam AI section since 2019.

Question 51

How much did companies spend on AI in 2017?

Answer 51

$13.5 billion.

Question 52

How has JPMorgan used AI for efficiency?

Answer 52

Deployed AI to reduce document processing from 300,000+ hours to seconds.

Question 53

How do hedge funds use AI?

Answer 53

Detect acquisitions from subtle market changes imperceptible to humans.

Question 54

For risk assessments to improve accuracy and efficiency.

Answer 54

For risk assessments to improve accuracy and efficiency.

Question 55

Which finance tasks have high AI automation potential?

Answer 55

Reconciliations, reporting, auditing, investment advising, trading, compliance, fraud detection.

Question 56

What new finance roles are emerging with AI?

Answer 56

Business strategy, financial engineering, data science, operations, and analytics.

Question 57

How might AI affect economic cycles in finance?

Answer 57

Could eliminate bull and bear cycles, disrupting traditional economic theory.

Question 58

What is the risk to entry-level finance jobs from AI?

Answer 58

Up to 30% could be eliminated in 5 years due to automation.

Question 59

What is Intelligent Automation (IA) in fintech?

Answer 59

Merging AI with human insight, becoming the new norm for efficient processes.

Question 60

What is the long-term outlook for finance jobs with AI?

Answer 60

Unclear for some roles, but AI excels in speed, cost, and reliability, while humans remain better in unpredictable or social tasks.