Deep Learning in Finance: From Implementation to Regulation

7 Pages Posted: 20 Apr 2022

See all articles by Louis Bertucci

Louis Bertucci

Institut Louis Bachelier

Marie Briere

Amundi Asset Management; Paris Dauphine University; Université Libre de Bruxelles

Olivier Fliche

French Banking Supervisory Authority

Joseph Mikael

EDF Energy

Lukasz Szpruch

University of Edinburgh - School of Mathematics; The Alan Turing Institute; Simtopia

Date Written: April 10, 2022

Abstract

Despite important theoretical questions that remain to be solved, Artificial Intelligence and Deep Learning are being increasingly used in the Finance and Insurance sector. Beyond straightforward data analytics, decision models are being implemented with Deep Learning. These algorithms cannot be used blindly. The understanding of the underlying problem is key. Humans, engineers or mathematicians, are essential. One trendy application is the use of Deep Learning (specifically GANs) to generate datasets. In finance, data are often scarce and having the possibility to generate new data (similar to an original dataset) can be decisive. In many applications, explainability of Artificial Intelligence is critical to protect consumers. Explainability is not a one-size-fits-all concept, and several degrees of explainability may have to be reached. Explainability to non-specialists is an additional challenge. Biais in the learning data is critical to assess because biases will be reproduced by the algorithm, and lead to unexplained discriminations. The role of regulatory agencies will be crucial to protect consumers while allowing innovation. There is currently no unified regulatory framework. The European Commission's Artificial Intelligence Act (draft proposal in April 2021) lists prohibited artificial intelligence practices and defines high-risk application areas for which they identify requirements ( risk management system, data governance, technical documentation and record keeping, transparency, human oversight, accuracy, robustness and cybersecurity).

Keywords: AI, deep learning, regulation, explainability

JEL Classification: G21,G22, G28

Suggested Citation

Bertucci, Louis and Briere, Marie and Fliche, Olivier and Mikael, Joseph and Szpruch, Lukasz, Deep Learning in Finance: From Implementation to Regulation (April 10, 2022). Available at SSRN: https://ssrn.com/abstract=4080171 or http://dx.doi.org/10.2139/ssrn.4080171

Louis Bertucci

Institut Louis Bachelier ( email )

Palais Brongniart
28 Place de la Bourse
Paris, 75002
France

Marie Briere (Contact Author)

Amundi Asset Management ( email )

90 Boulevard Pasteur
Paris, 75015
France

Paris Dauphine University ( email )

Université Libre de Bruxelles ( email )

Brussels
Belgium

Olivier Fliche

French Banking Supervisory Authority

Paris
France

Joseph Mikael

EDF Energy ( email )

France

Lukasz Szpruch

University of Edinburgh - School of Mathematics ( email )

James Clerk Maxwell Building
Peter Guthrie Tait Rd
Edinburgh, EH9 3FD
United Kingdom

The Alan Turing Institute ( email )

British Library, 96 Euston Road
96 Euston Road
London, NW12DB
United Kingdom

Simtopia ( email )

United Kingdom

HOME PAGE: http://https://www.simtopia.ai

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