Banking and investing in the years to come will hardly resemble what they looked like or how they worked for our grandparents.
An enormous amount of data and high digitalisation speed continue to transform the landscape in the financial sector and how customers get involved in it. The ubiquitous and large variations of data, combined with the sector’s dependence on technology, pose new challenges, threats and vulnerabilities.
The newly established industry-driven research center, Center for Research to Advancing Financial Technologies (CRAFT), funded by the National Science Foundation’s Industry-University Cooperative Research Center Program, aims to seize the opportunities for progress and innovation in industry and to address the many threats and vulnerabilities it faces.
At a launch event for CRAFT in the autumn of 2021, industry leaders discussed many examples of such urgent challenges and research opportunities. For example, in banking, the opportunities lie in promoting open banking and, more generally, open finance; support innovations and customizable services that meet changing customer needs and expectations; and engage innovative companies to offer value-added solutions.
The fast The pace of digitization requires robust solutions to protect digital identities and highly sensitive data. Another challenge is to ensure robust interoperability, or the ability of different financial service systems to connect to each other, and standards for seamless and reliable customer service delivery. Modernized technology platforms for financial institutions and market infrastructure for retail, wholesale and cross-border transactions must be resistant to malicious agents using artificial intelligence-based features for real-time detection and mitigation of economic crime.
While data is readily available and bulky in social media-enabled channels and in decentralized financial systems, reliability, dependability and security are major concerns that need to be addressed. Easy access to investment platforms and data and a resulting high degree of investor participation create a need for new frameworks for financial expertise to reduce risks, such as the dissemination of misinformation and high market volatility.
CRAFT researchers address many of these compelling and pressing issues. In addition, they develop AI-based financial decision-making tools that provide explanatory and fair decision-making recommendations, using large amounts and variations of data. Researchers also build natural language processing-based techniques for investment and risk management decisions that can be used for a range of financial services.
Activities in decentralized financial platforms are studied and methods are developed to detect malicious activity and fraudulent behavior. Network innovations are developed to support interoperability and Internet of Things-enabled deliveries of financial products in domains such as insurance and lending.
CRAFT develops solutions to meet the challenges of climate change and sustainability in the financial industry. Through these projects – and many others to come – CRAFT will drive the transformation of future financial services.
As the country’s oldest and one of the world’s most recognized technological research universities, Rensselaer faces the most pressing problems facing humanity and our planet today. Want to learn more about research taking place at the Rensselaer Polytechnic Institute? Subscribe to the university’s blog.
About the author
Professor Aparna Gupta is co-director of the Center for Research against the Promotion of Financial Technology. Her research focuses on financial decision support, risk management and financial development.
