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NatWest is using AI to understand how financial markets behave

Artificial intelligence will be used to predict financial market patterns and generate insights following a collaboration between NatWest, Microsoft and DreamQuark.

A new platform, called Next Generation Complex Analytics, will use artificial intelligence to simulate financial markets, transport networks and other environments. It will then use learning from this to spot opportunities and risks in certain markets using this data.

The service is currently being tested on multiple use cases spanning NatWest’s business. For example, it will analyse the market for Buy-to-Let mortgages and the effect of price changes on the demand for small business loans. After insights are generated, staff at NatWest will evaluate the suggestions made by the platform and decide whether the conclusions would lead to a better financial performance than more traditional modelling methods.

“By allowing us to better predict future outcomes, risks and trends, the implementation of this technology could be of significant value to our customers and shareholders over the coming years. For the first time we’ll be able to deliver an aggregated, forward looking view of the world around us, ultimately helping us build a stronger, safer bank,” said Kevin Hanley, Director of Innovation and Solutions at NatWest.

This news comes as Microsoft releases its Accelerating Competitive Advantage with AI report. It revealed that firms using AI perform 11.5% better than those not using it at all. The financial services industry is leading the way in AI uptake and leaders of most firms in the sector (51%) want to be innovative in their use of the technology.

Cindy Rose, Chief Executive at Microsoft UK, said: “AI is the engine of the fourth industrial revolution. It has the potential to fundamentally transform how entire industries operate, delivering greater value to organisations, employees, customers and society as a whole. NatWest’s ambition to harness this technology to deliver more sophisticated insights, boost performance and reduce risk is an excellent example of the transformative powers that AI offers.”

This is the second collaboration between Microsoft and NatWest in 2019. They have previously worked together to create an AI-assisted chatbot and data warehouse to improve the speed and accuracy of lending decisions for customers of NatWest’s Esme Loans, a standalone digital lender.

Hanley added: “We are genuinely excited by the opportunities afforded by this new partnership with Microsoft and DreamQuark.”

François de Lescure, Chief Sales and Marketing Officer and DreamQuark, said: “We are thrilled to work on this innovation project with NatWest and Microsoft. DreamQuark’s mission is to facilitate the high-scale production of trusted AI solutions, on which banks and insurance companies can rely to solve concrete challenges and generate new revenues. We are excited by this promising new partnership, establishing a solid base for our further expansion in the UK market.”