South Korea’s financial watchdog is planning to introduce artificial intelligence (AI) technology in examining private equity funds.
The Financial Supervisory Service announced on June 18 that it has started a process to select a company that will develop an artificial intelligence (AI) system to support human decision-making in examining terms and conditions of new private equity funds. This project is driven by the FSS’ plans to establish a smart financial supervisory system based on information technology, such as AI and big data.
The FSS will apply “machine reading comprehension,” a technology that enables a machine to read and understand texts, just like human, and provide an accurate answer to a specific question, to the screening system where an AI algorithm is tasked with analyzing data and proposing and inferring an optimum answer to a predefined query.
To this end, the FSS is planning to re-analyze PEF reports submitted by financial institutions to establish learning data based on questions and answers and provide a system in which an AI engine is able to judge adequacy of future terms and conditions through guided learning. It expects to increase its efficiency and speed of screening contracts of new PEFs as AI preliminarily reviews major evaluation items.
South Korea has seen an explosive rise in the number of PEFs since the government’s policy overhaul in October 2015. Last year alone, 6,852 new PEFs were reported, the FSS said.