Financial regulators increase AI engagement amidst COVID pandemic
Israeli startup Fintica AI can identify anomaly and fraud detection as well as risk protection and market event classification.
As COVID continues to ravage the United States, Asia, and countries across Europe, currencies and markets continue to lurch from unpredictable to turbulent, and every shade in between. As early as March 2020, the OECD noted widespread unprecedented market risk aversion efforts. In a report entitled ‘Global financial markets policy responses to COVID-19’, it noted, that “stock markets have declined over 30%, implied volatilities of equities and oil have spiked to crisis levels, and credit spreads on non-investment grade debt have widened sharply as investors reduce risks,” adding, “the global financial crisis underlined the importance of comprehensive and coordinated efforts – within and across countries – to ensure business and market confidence is restored. As the impact of COVID-19 erodes market and business confidence, financial authorities are encouraged to implement early and ambitious policy responses in their respective jurisdictions.”
As such, it is the financial regulators who are among those answering the call, leading the search for innovation, while effective market surveillance technology is still a major issue in capital markets. Around the world, surveillance teams at stock exchanges are using monitoring systems that are still generating a high level of false positive alerts thus requiring substantial manual intervention.
Living up to its nation’s reputation as a hub for fintech and innovation, the Israel Securities Authority in June selected five fintech companies to participate in their Data Sandbox pilot program, a program of the agency’s Fintech Innovation Hub established in 2018. The program is designed with an emphasis on public sector collaboration with regulated entities to help meet real-world needs of the industry. In November, Hong Kong’s Securities and Futures Commission inked a financial technology cooperation agreement with their Israeli counterparts.
Private investors have taken note, with investment leading market research firm Gartner reporting that a quarter of IT professionals upped levels of investment in AI in light of COVID-19, with 75% expressing intentions to commence new AI projects in the first two quarters of 2021.
One such company benefiting from the public and private sector’s increased interest in AI is Israeli startup Fintica AI, whose technologies have honed capabilities to identify anomaly and fraud detection as well as risk protection and market event classification. Their customers are capital market stakeholders and compliance teams, whom they seek to arm with efficient ways to make sense of the massive market data generated.
“COVID has increased the risks from so many angles,” explained Fintica CEO Philippe Metoudi, “people are working from home, away from secure servers, money is moving in irregular fashions as companies and individuals have different needs. Efficient use of AI will separate those that survive from those that fall foul of this very turbulent period for the markets, and for all of us.”