Advancing Science in Europe: The European COST Action FinTech and AI in Finance
20.06.2023 Coordinating over 300 colleagues from 51 countries, all doing research on various topics in the FinTech field, is not an easy task. Prof. Dr. Jörg Osterrieder, Chair of the COST Action FinTech and AI and Professor of Sustainable Finance at the Institute Applied Data Science at the Bern University of Applied Sciences, copes with this challenge with patience and a lot of know-how, even though he has to «juggle early morning meetings with night owl scholars and everything in between».
Boosting research, innovation and careers: The exchange in the EU-funded COST Actions is an excellent opportunity for researchers to launch initiatives, work together on projects and expand their own network. One COST Action focuses on FinTech and Artificial Intelligence (AI) in Finance («FinAI») and is managed by Prof. Dr. Jörg Osterrieder.
«Transparency in finance is one of the most important goals we should pursue these days», Osterrieder is convinced. «It is the only way we take an important step towards the future of finance and sustainability. We are therefore very proud to be part of the COST Action FinAI. For the first time in 50 years a Swiss University of Applied Sciences has both held the Action Chair and been the scientific grant holder.» This brings us to Prof. Dr. Branka Hadji Misheva. She oversees the budget and coordinates the scientific activities of the COST Action FinAI. «Being able to help shape the global reach and Pan-European participation is really a great challenge», she says.
A global network of researchers, shaping the future of FinTech and AI in finance
Currently, the dynamic network consists of 303 researchers from 51 different countries, of which 39 are European countries. The geographical diversity reflects the global nature of financial markets and the ubiquity of technological disruption, regardless of borders and is thus in a very favorable position to understand and shape the future of FinTech and AI in finance.
The COST Action FinAI is organized around several key research areas. These areas focus on the use of technology to transform financial systems and include:
- AI and machine learning in finance.
- Blockchain and distributed ledger technology.
- Cybersecurity in financial services
- Robo-advising and automation (algorithmic trading)
- Regulatory technology (RegTech)
- InsurTech (insurance technology
- Digital currencies and payment systems
- Financial Data Science
Each theme represents a unique collection of research projects driven by the collective intellectual curiosity and expertise of the international research team.
With an expanding global network and diverse research themes, the COST Action FinAI will continue to drive innovations that influence policy and foster a community of shared learning and discovery. It continues to invite collaboration from all corners of the globe to jointly explore the exciting and challenging frontiers of FinTech and AI in finance.
Inspiring workshop with the European Commission and the European Parliament
In recent months, the COST Action FinAI has achieved significant milestons, such as a two-day workshop in Brussels with members of the European Commission and the European Parliament, where they discussed the AI Act and MICA (markets in crypto assets) regulation. These groundbreaking regulations have positioned Europe at the forefront of global regulation in the fields of AI and digital finance. «The workshop was an unparalleled opportunity and instrumental in fostering dialogue between the research community and policymakers, helping to ensure that our research is aligned with policy objectives and can effectively contribute to shaping the future regulatory landscape», said Branka Hadji Misheva. «Having the opportunity to directly communicate our research findings and understand the needs of policymakers was a powerful experience that will shape our approach to future research», added Jörg Osterrieder.
This year, BFH will host of the annual Management Committee Meeting and the research conference on AI in Finance, from 27-29 September, where researchers from the COST Action FinAI network will share their scientific projects and innovative insights.
What is a COST Action?
COST: (European Cooperation in Science and Technology) is a funding organisation for research and innovation networks. The so-called Actions help connect research initiatives across Europe and beyond and enable researchers and innovators to grow their ideas in any science and technology field by sharing them with their peers. COST Actions are bottom-up networks with a duration of four years that boost research, innovation and careers.
The objectives of the COST Action FinAI
In early 2018, the European Commission unveiled (a) their action plan for a more competitive and innovative financial market, and (b) an initiative on AI with the aim to harness the opportunities presented by technology-enabled innovations. Europe should become a global hub for FinTech, with the economy being able to benefit from the European Single Market.
The COST-Action will investigate AI and FinTech from three different angles: Transparency in FinTech, Transparent versus Black Box Decision-Support Models in the Financial Industry, and Transparency into Investment Product Performance for Clients. It aims at closing the gap between academia, industry, the public and governmental organisations by focusing on innovation and working in an interdisciplinary way.
The key objectives are:
to improve transparency of AI supported processes in the Fintech space
to address the disparity between the proliferation in AI models within the financial industry for risk assessment and decision-making, and the limited insight the public has in its consequences by developing policy papers and methods to increase transparency
to develop methods to scrutinize the quality of products, especially rule-based «smart beta» ones, across the asset management, banking and insurance industries.