AI for Financial Services

Webinar: AI in Financial Services

Introduction

Michael Grant Hussain Sultan

Director, Technical Consulting Partner
AI: draw from past experience to make future decisions
Information Technology Human Judgment

• Simple logic
• Rule-based systems
• Statistical modeling and summarization
◦ Generalized linear models
• Modern machine learning methods
◦ Deep learning
◦ Gradient boosting
 The AI stack: conceptual and physical

Deployments
Systems of Engagement Report generation, Dashboards, REST APIs
Web apps, real-time processes
e.g. Web app, Mobile, Alexa, IFTTT etc.

Model Inventory Model Validation Model Training

Versioned Archive Intent & Numerical Saleable, Interpretable
Systems of Intelligence
Data Science Tools
e.g. Risk management, fraud detection, marketing Notebooks, Code control, open-source AI packages

Data Layer
Systems of Record Customer, bureau, marketing, etc.
ML feature storage
e.g. FDR, Transunion, ID Analytics, FX etc,

Original Framework Source: Greylock Partners, Jerry Chen The New Moats
 The AI stack: conceptual and physical
Scalable compute: cloud-native, scalable, GPU accelerated

Deployments
Systems of Engagement Report generation, Dashboards, REST APIs
Web apps, real-time processes
e.g. Web app, Mobile, Alexa, IFTTT etc.

Model Inventory Model Validation Model Training

Versioned Archive Intent & Numerical Saleable, Interpretable
Systems of Intelligence
Data Science Tools
e.g. Risk management, fraud detection, marketing Notebooks, Code control, open-source AI packages

Data Layer
Systems of Record Customer, bureau, marketing, etc.
ML feature storage
e.g. FDR, Transunion, ID Analytics, FX etc,

Original Framework Source: Greylock Partners, Jerry Chen The New Moats
The opportunity: more than $1T

Potential for cost sharing and savings alone $490B

• Banking: $490B
• Insurance: $350B
• Investment Management: $200B $350B

Additional created value: ???

$200B
Source: Autonomous Next, “#Augmented Finance & Machine Intelligence”
AI in Financial Services: unique constraints

Regulation Delayed Outcomes Governance

Automation and decisioning needs
to comply with federal laws:
- Fair Housing Act
- Equal Credit Opportunity Act
- Unfair and Deceptive Acts and
Practices
- Community Reinvestment Act
Business economics rely on
measuring customers performance
over long periods of time,
oftentimes years, not just until
checkout or conversion
Models and decision making
subject to internal and external
audits from largely non-technical
examiners
AI in Financial Services: use cases

Compliance / Marketing /
Customer Experience
Regulatory Decisioning

Chat Bots KYC/AML Monitoring

Voice Assistants CECL Readiness Personalized Offers

Biometrics Model Management Cross Product

(OCC-2011) Recommendation
Fraud Detection
Stress Testing / CCAR Credit Risk
AI in Financial Services: use cases Recommender systems

Compliance / Marketing /
Customer Experience
Regulatory Decisioning
NLP
Chat Bots KYC/AML Monitoring

Voice Assistants CECL Readiness Personalized Offers

Biometrics Model Management Cross Product

(OCC-2011) Recommendation
Fraud Detection
Stress Testing / CCAR Credit Risk

Neural networks Multi-component models

Decision trees
 Model-driven Decisions
NPV Waterfall for Segment “X”
How do I evaluate different customers for
different product configurations? £50

Product Treatments £30

(Card Type, APR, Credit Line) Most impactful to
£10 bottom line
-£10 Rev. A Rev. B Exp. A Exp. B PV Cost to NPV
Acquire
NPV Waterfall for Segment “Y”
Z

£50
Cost to Acquire

£30 Improves marketing

Y
and operational scale
£10

-£10 Rev. A Rev. B Exp. A Exp. B PV Cost to NPV

Acquire
X NPV Waterfall for Segment “Z”
£50
Avoid marketing or
£30
Value of Customer approving
£10
-£10 Rev. A Rev. B Exp. A Exp. B PV Cost to NPV
Acquire
-£30
 Where’s the nonlinearity?

Nonlinear Models Pay Off on large data .. But Come with Added Complexity
Nonlinear models tend to be more complex and need Interpreting nonlinear models can be a challenge
special attention to interpret them across hundreds of trees
Tree #1 Tree #n

Many trees are aggregated across to

generate a single score

1
Benchmarking Random Forrest Implementations http://datascience.la/benchmarking-random-forest-implementations/
Model Management Systematically manage new and existing models to self-service

Perspective data science and regulatory needs

Challenges:
Leading financial services companies have
1. Data dependencies à ML models may depend on invested in bespoke model management
signals from unstable systems
solutions
2. Reproducibility & Validation à Difficult to
analyze & update past models with confidence

3. Production Deployment à Model may be built in

a language that may require translation into a
production system

4. Heterogeneous Processes à Bespoke processes

for model building varying from team to team
 Treat models as software assets while leveraging best in class custom and
Model Management enterprise solutions
Solution
Standardized & Reusable Modeling Pipeline

Continuous Integration &

Deployment Anaconda
Repository
Model Build
Hive Feature Store Package
Biz Analyst

Build/Train Deploy & Monitor

Historical model versions are built
Automated Builds and Job and stored for future use
Scheduling
Data Lake

Data Scientist
Evaluate, Review
and Validate

Model Reviewer

Automated
Model Validation Dashboard
Automated Pull
Request and Change Log
Action Items

• Learn more about Anaconda Enterprise:

◦ https://www.anaconda.com/enterprise
• Learn more about Full Spectrum Analytics:
◦ https://www.fullspectrumanalytics.com
 Thank you for coming!
Webinar: AI in Financial Services

https://fullspectrumanalytics.com https://anaconda.com/enterprise