Fintech
Fintech, Great Language Models Meet in Heaven
A judge comments on the projects during the HICOOL Global Entrepreneur Competition held in Beijing in June. [Photo provided to China Daily]
The rapid emergence of new technologies, especially artificial intelligence represented by large language models, is driving transformative changes in China’s financial sector. However, more efforts are needed to overcome regulatory and ethical challenges to fully exploit their potential, experts said.
The comments came after a series of policy documents were issued to support and cultivate quality new productive forces in the financial sector. In April, the China Banking and Insurance Regulatory Commission, the Ministry of Industry and Information Technology and the National Development and Reform Commission jointly issued a notice to deepen AI-related financial services in the manufacturing sector to help advance new industrialization. The document stressed the need for lenders and insurers to implement innovation-driven development strategies.
Xin Guobin, vice minister of industry and information technology, said that a technology-industry-finance integration initiative has been launched to explore industrial and financial cooperation in innovative ways. Over the past three years, the initiative has facilitated more than 830 billion yuan ($114 billion) in corporate financing, supporting more than 290,000 high-quality enterprises and involving more than 2,400 financial institutions.
As financial institutions work to help the real economy adopt cutting-edge technologies, it is equally important for them to adopt the latest technologies for innovation, experts added.
Yang Xiaojing, an AI standards expert at the Internet Society of China, said China’s fintech industry is among the world’s leaders, especially in mobile payments.
“Driven by a strong consumer market and technological advances, China has become one of the world’s largest fintech markets. Chinese companies, talents and technologies are increasingly integrating and influencing the global industrial supply chain,” Yang said.
Artificial intelligence technology, particularly LLMs, is rapidly evolving and reshaping the financial industry.
Yang, who has followed the development of AI in finance through three stages, pointed out that from 2010 to 2014, AI was mainly used for analytical purposes.
From 2015 to 2020, the availability of vast unstructured data enabled machine learning to discover new investment factors. It was then that Yang and his team successfully integrated Baidu’s search data and spatio-temporal data with deep learning technology to launch the first automated credit bond analysis service (Credit IQ) and the first AI-based mutual fund in the domestic capital market. Credit IQ successfully implemented automated monitoring for 500 billion yuan worth of credit bonds in four months.
The third phase began in 2020, when LLMs, combined with industry-specific knowledge and intelligent agents, began to replace some aspects of productivity in the financial sector, Yang added.
For example, OpenAI, the US company that developed ChatGPT, sees finance as a primary application area for its technologies. Working with Morgan Stanley, it introduced an AI-powered investment advisor that uses GPT-4, and more recently partnered with US social media site Reddit to use community content to train the model.
Yang said that AI applications in finance can be divided into four major areas: intelligent risk control, robotic investment advisors, intelligent customer service, and AI-assisted investment research.
“China’s leadership in digital banking transformation puts it at the forefront of intelligent risk control,” Yang said, adding that banks such as the Industrial and Commercial Bank of China and the Agricultural Bank of China have developed proprietary LLM platforms for intelligent risk and operation control.
Roboinvestment advisors have seen significant adoption in the United States, and Chinese online securities platforms such as Eastmoney and Tonghuashun have also launched LLM-backed smart dialogue services, Yang said.
Intelligent customer service is a priority for all financial institutions, given their large user base and immediate demand. AI-assisted investment research is an area of growing interest for domestic and international investment firms, the expert added.
Despite all the progress, however, the regulatory framework and ethical standards for AI applications in finance are still evolving, experts say.
“The AI era is likened to critical infrastructure such as water and electricity, which require global cooperation. While the United States is leading in model development, China is rapidly catching up with significant progress in AI patents and applications,” Yang said.
As a judge for the HICOOL Global Entrepreneur Competition held in June, Yang observed a strong presence of overseas projects, highlighting the potential for global collaboration. He sees a promising future for Sino-US cooperation in AI, benefiting global AI development and promoting a responsible AI ecosystem.
“Collaborative efforts and exchanges between experts from both countries can lead to mutual progress and innovation in the financial sector,” Yang added.