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Shinhan Financial Group to Develop Neo 2.0 with Element AI
An AI-based Investment Consulting Platform
Shinhan Financial Group to Develop Neo 2.0 with Element AI
  • By Yoon Young-sil
  • February 26, 2020, 11:14
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Park Woo-hyuk (left), vice president of Shinhan Financial Group, and Karthik Ramakrishnan, head of advisory at Element AI, pose for a photo after signing an MOU at Shinhan Digital Campus in Jung-gu, Seoul, on May 2, 2019.

Shinhan AI, a Shinhan Financial Group subsidiary specializing in artificial intelligence (AI), will develop Neo 2.0, an upgrade of its own AI-based investment consulting platform Neo, by teaming up with Element AI, one of the world's best AI solutions companies.

Neo was introduced to the market by Shinhan AI following its establishment in September last year.

Shinhan AI has decided to conduct joint research with Element AI to develop Neo 2.0 and is in the final stage of a discussion with the Canadian company, Shinhan Financial Group said on Feb. 25. When both companies start their research, Shinhan AI's research team will be dispatched to Element AI’s main office in Montreal to create a new market prediction model based on a latest AI analysis method. It will take about six months to develop the model.

Element AI was founded by Prof. Joshua Bengio of the University of Montreal, Canada, one of the world's top three scholars in this field. The company has emerged as a leader in AI and attracted US$225 million in investment from Microsoft and Intel.

Shinhan Financial Group signed an MOU with Element AI in May 2019 to strengthen cooperation between the two. Shinhan AI became the first partner of Element AI.

Neo is an AI-based investment advisory platform built by Shinhan AI. It predicts the market by learning and analyzing 18 million unstructured data covering 430,000 financial data accumulated for 30 years and psychological and policy variables.

Other financial firms provide robo-advisors using AI, but Neo is completely different from them in terms of the amount of data, the quality of analysis techniques, and operating systems. Most of other services are “hybrid types” where professional managers set up portfolios when robo-advisors recommend pools of investment products according to the asset allocation model, but Neo is dedicated to AI from pool configuration to investment decisions and asset rebalancing. This is because the Shinhan Financial Group judged that it will promote AI as one of its core services, not just a support tool.

Neo has received good responses from the market too. The two investment products that were officially launched based on Neo on Jan. 28 secured 48 billion won in establishment amount in 20 business days since their launches without a marketing channel. Neo's greatest strength lies in its risk hedging capacity. As the financial market plunged due to the impact of COVID 19 infections, the cumulative KOSPI yield dropped to the middle of the -3 percent range on Feb. 24 after the product launches, but Neo-based securities investment trusts showed earning rates close to 1 percent during this period.

Shinhan AI expects that with Neo 2.0 will help customers increase their returns with much more analysis tools and sophisticated predictive power. It is expected to double its analysis markets to 30 from current 15.