Nov, 15 2017 07:00 JST

Greg Gibb of Lufax Holdings: On of the Impact of Big Data and AI on the Future of Finance


HONG KONG, Nov, 15 2017 - (ACN Newswire) - "It only takes a few minutes or even seconds to make a decision on a loan, which in turn increases the loaning opportunity for each borrower," said Greg Gibb, opening his keynote speech on the impact that Big Data and Artificial Intelligence (AI) will have on the financial sector.

Gibb, Co-Chairman and CEO of Lufax Holdings, gave the speech on Nov 4 at the 2nd Annual Conference on the Chinese Era of Digital Finance, at the Institute of Digital Finance, Peking University. Greg believes that big data and AI financial management can increase market transparency, and as such, financial institutions could render investors with more pertinent services and assist their clients to diversify investment risk, while improving operational efficiency and sustaining real economic development.

Greg pointed out that big data and AI help institutions to understand the credit standing of an individual borrower from multiple perspectives so that a rapid decision could be made. AI and big data will lead the market to higher levels of transparency and standardization. Financial institutions will have a faster understanding of corporations, including market changes within the respective industry, corporate position and cash flow status, etc.

Big Data and AI can also help the platform to better understand the specific needs of the investors in order that a better choice of products can be arranged. Greg said, "We found that the accuracy of the traditional (questionnaire) method of assessing the customers' need is relatively low. In the past few years, we found that the data from the clients' end, including their answers to a few psychological issues, we can grasp even more understanding of their ability to withstand risk.

"Therefore, in the future, not only that AI and big data can enable us to attain a thorough understanding of our clients and companies from the asset end, but also enable us to know if the investors are suitable participants of the market and which investment products are most appropriate from the investment end.

"The development on big data and AI will lead to the emerging of many new product portfolios for clients to invest in diversified sectors; or if adopted dynamically, clients' fund can be allocated to diversified areas, with relevant market trends taken into consideration in order to reduce overall investment risk and to increase overall investment return."

The growing popularity of the U.S. Exchange Traded Funds (ETFs) in recent years has served as evidence. The ETF was originally a passive investment tool, while with the development of big data, it has been transformed into a more active and less costly way of investment. ETFs had gradually been replacing the largest part of the fund market.

The future development of big data and AI will also have a major impact on matching mechanism. "If there are clear rating standards on the asset end and lots of automatic investment tools with detailed understanding of individual investor, the market can actually achieve automatic matching." The automatic matching mechanism can greatly reduce labor costs as well as financial costs and bring about inclusion in financial services.

"In the past five years, we think the internet has only exerted its influence on channel extension, but big data will affect the whole financial market in all aspects in the next five years. Firstly, AI and big data will enhance market transparency and standardization and support development in real economy; secondly, it can help investors to attain more diversified investment strategies, and clients can attain higher returns. This is a relatively big help to the society as a whole, yet a great challenge for the financial sector in itself."

Greg forwarded the idea that there could be induced-risk coming along with big data and AI. Firstly, short-term accuracy does not guarantee the long-term one; secondly, as large number of transactions will be assigned to computerized automation mechanism, this can bring different problems. "We cannot conclude that large data and AI must necessarily be good. We must be careful in controlling risk," he concluded.


Sectors: Daily Finance

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