Financial Technology, best known as fintech, involves payment, big data analysis, applications, platforms, network security and more. Fintech not only enhances the efficiency of financial services, but also makes life more convenient for the general public and creates opportunities for the finance industry. In recent years, fintech has been standing on its own as a new field.
HKSTP’s partner companies in fintech are growing strongly. Financial Data Technologies Ltd (FDT) is one of them. FDT has operated its non-profit project, FDT Incubator, since its incorporation in 2013. The incubation programme, which aims to produce investment experts, is conducted in conjunction with some of the biggest names in higher education such as the University of Oxford, the University of Cambridge, the University of Chicago, Columbia University, Tsinghua University, National Taiwan University and the University of Hong Kong. FDT offers a smart investment app for simulated trading in forex, futures and equities. It has also hosted global investment competitions for students.
If its core business was developing finance talent, FDT would have an outstanding report card to show for it. However, as the company’s name suggests, its core business is financial data, and interestingly FDT generates revenue from it only after four years of operation.
Propelling the financial industry over the long term
According to the company’s co-founder and Chief Operating Officer Mark Lin, the management team is formed of scientists and tech elites hailing from Wall Street, the Chinese Academy of Sciences, IBM, Yahoo, Microsoft and Tencent. Its business model is very clear. First, FDT strives to discover financial investment talent through its incubation programme, and second, it is amassing massive data from which it can evaluate investors’ behaviour. Using this information, it aims to elevate service standards, trade efficiencies and the quality of decision-making by financial service providers.
As these services are useful for the long-term development of the finance industry, it will take time for the results to show. So far the FDT Incubator has connected with 2 million students around the world. In the past four years, FDT has identified considerable talent with great potential for the finance industry. As for data, FDT’s partners such as securities firms and investment firms have provided unpublicised transactions to the tune of trillions of Hong Kong dollars. Along with the simulated trading and investment competitions, FDT’s big data bank is a vast treasure trove. Using this as a base, the company’s data scientists are organising trading data, and using deep learning and machine learning to build artificial intelligence tailored for the financial markets.
Using FQ to identify exceptional financial talent
How does FDT’s AI help finance companies? Mark points out that the first task is to identify internally the people who are best suited for roles that make trading and investment decisions, such as hedge fund managers. In addition to their Intelligence Quotient (IQ) and Emotional Quotient (EQ), professionals in the investment and asset management field should also be rated on their Financial Quotient (FQ). Whether a person is discerning, able to withstand high pressure, stay level-headed and conduct analysis under any circumstances, or look at the big picture and act quickly, boldly and precisely, can determine if he or she can be entrusted to manage multi-million-dollar funds. Some of these qualities are inborn and can’t be nurtured. Some are intangible and hard to quantify. Some emerge only in certain circumstances.
Mark estimates that more than 90% of people do not have a sufficiently high FQ for managing financial transactions. However, companies often have to spend a great deal of time to come to such a conclusion, at the cost of missed opportunities or investment losses. FDT can help financial companies analyse all buying and selling decisions and optimise human resource utilisation by focusing attention on the people with high FQ potential and deploying others to more suitable positions.
Improving customer service and risk management
Evaluating the FQ of customers is also important, especially as regulations controlling the sale of investment products are tightening around the world. Mark reveals that Mainland’s largest securities conglomerate Huatai Financial Holdings, after a year-long Proof of Concept, signed a long-term service agreement on fintech artificial intelligence with FDT in March 2018. Through the partnership, Huatai will use FDT’s technology to analyse its traders’ investment capabilities. It will also analyse customers’ investment needs and risk profiles to recommend suitable products to help customers gain optimal return at reduced risk. In this way, financial companies can offer better customer service and risk management and lower compliance costs.
Tools to help facilitate financial transaction efficiencies
Mark emphasises that AI won’t replace the roles of professionals in the industry but rather help them do their jobs faster, in a more focused and efficient way. FDT also provides a range of reminders and analytics tools to investment managers to help them uncover profitable opportunities and make instant decisions. He points out that stock exchanges are certainly receptive to technologies that help expand transaction volume. Some FDT securities firm customers have won awards for their transaction volume from the Stock Exchange of Hong Kong.
HKSTP offers support on multiple levels
Hong Kong Science Park offers strategic advantages for FDT to realise a raft of big ideas that it still has up its sleeve. Mark says that HKSTP has people with finance sector knowhow who can provide solid recommendations and supportive measures for business development. Although FDT hasn’t brought in external investors, the company has connected with business partners and high-potential investors such as venture funds to create future development opportunities through the HKSTP’s network. The natural environment of Science Park is another attribute for attracting talent to the company, Mark believes.
He says that as FDT’s technology and database mature, the company is looking to ramp up its business with securities firms and financial institutions in Hong Kong and Mainland China. FDT expects rapid development in 2018, while financial markets around the world can expect healthier and more efficient development with the support of FDT technology.