Book Image

Hands-On Artificial Intelligence for Banking

By : Jeffrey Ng, Subhash Shah
Book Image

Hands-On Artificial Intelligence for Banking

By: Jeffrey Ng, Subhash Shah

Overview of this book

Remodeling your outlook on banking begins with keeping up to date with the latest and most effective approaches, such as artificial intelligence (AI). Hands-On Artificial Intelligence for Banking is a practical guide that will help you advance in your career in the banking domain. The book will demonstrate AI implementation to make your banking services smoother, more cost-efficient, and accessible to clients, focusing on both the client- and server-side uses of AI. You’ll begin by understanding the importance of artificial intelligence, while also gaining insights into the recent AI revolution in the banking industry. Next, you’ll get hands-on machine learning experience, exploring how to use time series analysis and reinforcement learning to automate client procurements and banking and finance decisions. After this, you’ll progress to learning about mechanizing capital market decisions, using automated portfolio management systems and predicting the future of investment banking. In addition to this, you’ll explore concepts such as building personal wealth advisors and mass customization of client lifetime wealth. Finally, you’ll get to grips with some real-world AI considerations in the field of banking. By the end of this book, you’ll be equipped with the skills you need to navigate the finance domain by leveraging the power of AI.
Table of Contents (14 chapters)
Section 1: Quick Review of AI in the Finance Industry
Section 2: Machine Learning Algorithms and Hands-on Examples

Breaking down the functions of a bank

Within a bank, as an intermediary between those with excess money (the depositors) and those who need money (the borrowers), there are two important questions that need to be answered:

  • How risky is a borrower?
  • What is the funding cost of money?

These are the two important questions that need to be considered before we look at the profit required for sustaining the business operations in order to cover its running costs.

When these decisions are not made properly, it threatens the viability of a bank. There could be two possible outcomes in such instances:

  • If the bank does not make enough profit to cover the cost of risk and operations when a risky event occurs, the bank could collapse.
  • If the bank fails to meet the depositor's requirements or fails to honor its borrower's agreements to lend, it hurts the credibility of the bank, thus driving potential...