The traditional banking business is undergoing an exciting period of disruption. Big data, blockchain, an eruption of new competitors of all shapes and sizes … With so much that is new, we run the risk of overlooking how artificial intelligence is already beginning to change the core of the financial business. Its impact is clearly manifest in five areas: Credit scoring (or creditworthiness or rating), market research, personal assistants, asset management, and fraud detection. Startups like Kensho, recently acquired for $550 million, and Dataminr use artificial intelligence algorithms to improve the management of financial assets. Dataminr is specifically focused on identifying patterns and indexes via social networks, whereas Kensho stands out for its ability to establish correlations between news – from Brexit to natural catastrophes – and the markets.
The scale of money laundering globally is estimated to be as large as $1 trillion to $2 trillion annually. The overwhelming majority of this money is channeled to organizations trafficking drugs, weapons and human beings, or used to finance terrorist activity. However, despite the fact that almost 70% of that illicit finance flows through legitimate financial institutions, the United Nations Office on Drugs and Crime estimates that less than 1% of the global trade is seized and frozen. In light of that, it's perhaps unsurprising that regulators are stricter today when it comes to enforcement. Since the 2008 financial crisis, regulators, particularly those in the U.S., have been handing down record fines to financial institutions seen to be trading with sanctioned parties and countries, or failing to appropriately comply with anti-money laundering (AML) initiatives.
Who will be the first to implement the new suite of Watson services? From the newly formed Watson Financial Services division, IBM has released the first suite of services covering regulatory requirements, financial crime insights, and financial risk modelling. These cognitive tools have been made possible following IBM's 2016 acquisition of global consulting operation, Promontory Financial Group. Promontory was originally working to provide support to banks dealing with the growing and tightening regulation and risk management within the financial services. It was the knowledge and expertise accessed in this acquisition that brought life to the new financial services-focussed Watson services, with regulation and risk accounting for two thirds of the suite, and a financial crime tool completing the set.
This walks you through how to build a Neural Network model for Kaggle's IEEE CIS Credit Card Fraud Competition. It discusses data preprocessing, learning lookup embeddings for categorical columns, visualizing full transaction embeddings, and ultimately ensembling this model with tree-based models to get an improvement in Leaderboard position.