Mizuho, IBM team up to develop new AI-driven solution for financial market forecasts

Maria Nikolova

The new solution will harness the capabilities of a unique artificial neural network technology called dynamic Boltzmann machine (DyBM).

Artificial intelligence (AI) solutions keep invading the financial services industry, with the latest partnership in this area announced earlier today by Japan’s financial services giant Mizuho Financial Group, Inc. (TYO:8411) and IBM Research – Tokyo.

The companies have announced the joint development of a new Market Forecasting Tool. The tool uses advanced AI technologies developed by IBM Research – Tokyo, including a unique artificial neural network technology called dynamic Boltzmann machine (DyBM). The latter mimics the human brain’s learning scheme.

The Market Forecasting Tool aims to offer a one-of-a-kind approach to predict financial markets trends. It utilizes time-series prediction logics to extract similar trend dates and to create future market trend predictions. The tool is being deployed within Mizuho Financial Group’s Global Markets Company to work on Asset Liability Management (ALM) and Treasury portfolio operation. Mizuho notes that ALM and Treasury portfolio are always important for banks, especially when loan demand is sluggish, and forecasting sharp rises and falls in interest rates and stock prices is a top priority.

Mizuho has leveraged outputs of multiple forecast models using market data for the last two decades to identify past dates which have high degree of similarity with the current market, then it has mapped the subsequent price trends of each similar date to develop the new forecasting tool that predicts future price trends and volatility. Mizuho now aims to bolster its capabilities of finding early warning signals of market volatility and forecasting the market using advanced AI technologies.

Mizuho’s engagement in implementing novel technologies into its operations has been demonstrated several times over the past months. In December 2017, for instance, Nomura Research Institute Ltd (TYO:4307) announced the successful integration of new technology into the call monitoring operations of Mizuho Securities Co., Ltd. The integration combines NRI’s voice recognition and AI technologies and aims to optimize Mizuho’s processes for monitoring and analyzing communication between investors and sales representatives, which are tracked for both compliance purposes and better customer care.

The increased technology use, however, has a dark side. In November last year, Mizuho said that it will shed 19,000 jobs by March 2027. The planned layoffs are in line with the bank’s business strategy which envisages streamlining of work processes via the increased use of new technology solutions.

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