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Investigating bankruptcy prediction models in the presence of extreme class imbalance and multiple stages of economy

arXiv.org Machine Learning

In the area of credit risk analytics, current Bankruptcy Prediction Models (BPMs) struggle with (a) the availability of comprehensive and real-world data sets and (b) the presence of extreme class imbalance in the data (i.e., very few samples for the minority class) that degrades the performance of the prediction model. Moreover, little research has compared the relative performance of well-known BPM's on public datasets addressing the class imbalance problem. In this work, we apply eight classes of well-known BPMs, as suggested by a review of decades of literature, on a new public dataset named Freddie Mac Single-Family Loan-Level Dataset with resampling (i.e., adding synthetic minority samples) of the minority class to tackle class imbalance. Additionally, we apply some recent AI techniques (e.g., tree-based ensemble techniques) that demonstrate potentially better results on models trained with resampled data. In addition, from the analysis of 19 years (1999-2017) of data, we discover that models behave differently when presented with sudden changes in the economy (e.g., a global financial crisis) resulting in abrupt fluctuations in the national default rate. In summary, this study should aid practitioners/researchers in determining the appropriate model with respect to data that contains a class imbalance and various economic stages.



Deep Learning for Financial Applications : A Survey

arXiv.org Machine Learning

Computational intelligence in finance has been a very popular topic for both academia and financial industry in the last few decades. Numerous studies have been published resulting in various models. Meanwhile, within the Machine Learning (ML) field, Deep Learning (DL) started getting a lot of attention recently, mostly due to its outperformance over the classical models. Lots of different implementations of DL exist today, and the broad interest is continuing. Finance is one particular area where DL models started getting traction, however, the playfield is wide open, a lot of research opportunities still exist. In this paper, we tried to provide a state-of-the-art snapshot of the developed DL models for financial applications, as of today. We not only categorized the works according to their intended subfield in finance but also analyzed them based on their DL models. In addition, we also aimed at identifying possible future implementations and highlighted the pathway for the ongoing research within the field.


Synechron launches AI data science accelerators for FS firms

#artificialintelligence

These four new solution accelerators help financial services and insurance firms solve complex business challenges by discovering meaningful relationships between events that impact one another (correlation) and cause a future event to happen (causation). Following the success of Synechron's AI Automation Program – Neo, Synechron's AI Data Science experts have developed a powerful set of accelerators that allow financial firms to address business challenges related to investment research generation, predicting the next best action to take with a wealth management client, high-priority customer complaints, and better predicting credit risk related to mortgage lending. The Accelerators combine Natural Language Processing (NLP), Deep Learning algorithms and Data Science to solve the complex business challenges and rely on a powerful Spark and Hadoop platform to ingest and run correlations across massive amounts of data to test hypotheses and predict future outcomes. The Data Science Accelerators are the fifth Accelerator program Synechron has launched in the last two years through its Financial Innovation Labs (FinLabs), which are operating in 11 key global financial markets across North America, Europe, Middle East and APAC; including: New York, Charlotte, Fort Lauderdale, London, Paris, Amsterdam, Serbia, Dubai, Pune, Bangalore and Hyderabad. With this, Synechron's Global Accelerator programs now includes over 50 Accelerators for: Blockchain, AI Automation, InsurTech, RegTech, and AI Data Science and a dedicated team of over 300 employees globally.


The 2018 Survey: AI and the Future of Humans

#artificialintelligence

"Please think forward to the year 2030. Analysts expect that people will become even more dependent on networked artificial intelligence (AI) in complex digital systems. Some say we will continue on the historic arc of augmenting our lives with mostly positive results as we widely implement these networked tools. Some say our increasing dependence on these AI and related systems is likely to lead to widespread difficulties. Our question: By 2030, do you think it is most likely that advancing AI and related technology systems will enhance human capacities and empower them? That is, most of the time, will most people be better off than they are today? Or is it most likely that advancing AI and related technology systems will lessen human autonomy and agency to such an extent that most people will not be better off than the way things are today? Please explain why you chose the answer you did and sketch out a vision of how the human-machine/AI collaboration will function in 2030.