Fintech and Artificial Intelligence in Finance: Towards a transparent financial industry

Professor of Finance in the Business School Valerio Poti, Head of the Banking and Finance Subject Area Professor Don Bredin and Assistant Professor Dr. Alessia Paccagnini this week secured a Horizon 2020 (H2020) Cost Action award in the Financial technology (FinTech) domain. The funding amount exceeds €500,000 and involves multiple collaborators across the EU.

The financial sector is the largest user of digital technologies and a major driver in the digital transformation of the economy. FinTech aims to compete with traditional financial industry methods in the delivery of financial services.

Globally, more than US$100 billion of venture capital and growth equity has been deployed to Fintech companies and Artificial Intelligence (AI) since 2010, and is still growing substantially. In early 2018, the European Commission unveiled their action plan for a more competitive and innovative financial market and initiatives on AI. The aim was to harness the opportunities presented by technology-enabled innovation in financial services.

“This research award will allow us to develop methods, techniques and technologies to help make the financial industry and financial markets more transparent to their end-users,” explained Professor Poti. “It will allow market participants and customers of financial institutions to make informed decisions across a broad category. For example, algorithms that classify the creditworthiness of potential borrowers in transparent ways, systems that warn supervisory authorities of risks to systems and need for remedial actions in a way that the regulators can make sense of.”

The research will take place over the next four years and aligns with the schedule over which transformative change in the financial industry—being driven by FinTech and the pervasive influence of AI is expected to happen.

This research, together with other research projects, places UCD College of Business firmly at the centre of the highly competitive and dynamic area of FinTech and Financial Data Science, which are strategic growth areas identified by the Irish Government.

The aim is to make Dublin the hub for this high-potential industry.

“In 1999, I came to work in Ireland as a manager of an Italian bank based in the IFSC, before moving to academia. Since that time, the IFSC and the Irish Government have pursued ways for Dublin to advance up the value chain as a Global Financial Centre,” comments Poti. “FinTech and the general advance of data science gives us the chance to turn this dream into reality.”

“We have the competitive advantage of Silicon Docks on our doorsteps and can combine this with decades of financial services experience to deliver world-class FinTech and become a global leader,” said Poti.

The H2020 funding will facilitate interactions and collaboration between different groups of academics and industry leaders already working on Fintech and AI in Finance. The collaborations will provide theoretical expertise to industrial partners and establish a large and vibrant interconnected community of scientists across diverse fields.

UCD College of Business faculty are part of a large network of over 80 research centres, universities from over 23 European countries, and regulators from all EU countries that will advance research funded by this award. UCD College of Business represents Irish academia in this extensive network. Partners from the same broad network have also applied for €5 million under another EU-funded research program to support a large scale doctorate in Financial Data Science, the outcome of which will be known in June.