Evaluating multi-label classifiers and recommender systems in the financial service sector

status: publishe

Collaborative-demographic hybrid for financial: product recommendation

Internship Report presented as the partial requirement for obtaining a Master's degree in Data Science and Advanced AnalyticsDue to the increased availability of mature data mining and analysis technologies supporting CRM processes, several financial institutions are striving to leverage customer data and integrate insights regarding customer behaviour, needs, and preferences into their marketing approach. As decision support systems assisting marketing and commercial efforts, Recommender Systems applied to the financial domain have been gaining increased attention. This thesis studies a Collaborative- Demographic Hybrid Recommendation System, applied to the financial services sector, based on real data provided by a Portuguese private commercial bank. This work establishes a framework to support account managers’ advice on which financial product is most suitable for each of the bank’s corporate clients. The recommendation problem is further developed by conducting a performance comparison for both multi-output regression and multiclass classification prediction approaches. Experimental results indicate that multiclass architectures are better suited for the prediction task, outperforming alternative multi-output regression models on the evaluation metrics considered. Withal, multiclass Feed-Forward Neural Networks, combined with Recursive Feature Elimination, is identified as the topperforming algorithm, yielding a 10-fold cross-validated F1 Measure of 83.16%, and achieving corresponding values of Precision and Recall of 84.34%, and 85.29%, respectively. Overall, this study provides important contributions for positioning the bank’s commercial efforts around customers’ future requirements. By allowing for a better understanding of customers’ needs and preferences, the proposed Recommender allows for more personalized and targeted marketing contacts, leading to higher conversion rates, corporate profitability, and customer satisfaction and loyalty

Computational analytics for venture finance

This thesis investigates the application of computational analytics to the domain of venture finance – the deployment of capital to high-risk ventures in pursuit of maximising financial return. Traditional venture finance is laborious and highly inefficient. Whilst high street banks approve (or reject) personal loans in a matter of minutes It takes an early-stage venture capital (VC) firm months to put a term sheet in front of a fledgling new venture. Whilst these are fundamentally different forms of finance (longer return period, larger investments, different risk profiles) a more data-informed and analytical approach to venture finance is foreseeable. We have surveyed existing software tools in relation to the venture capital investment process and stage of investment. We find that analytical tools are nascent and use of analytics in industry is limited. To date only a small handful of venture capital firms have publicly declared their use of computational analytical methods in their decision making and investment selection process. This research has been undertaken with several industry partners including venture capital firms, seed accelerators, universities and other related organisations. Within our research we have developed a prototype software tool NVANA: New Venture Analytics – for assessing new ventures and screening prospective deal flow. Over £20,000 in early-stage funding was distributed with hundreds of new ventures assessed using the system. Both the limitations of our prototype and extensions are discussed. We have focused on computational analytics in the context of three sub-components of the NVANA system. Firstly, improving the classification of private companies using supervised and multi-label classification techniques to develop a novel form of industry classification. Secondly, we have investigated the potential to benchmark private company performance based upon a company's ``digital footprint''. Finally, the novel application of collaborative filtering and content-based recommendation techniques to the domain of venture finance. We conclude by discussing the future potential for computational analytics to increase efficiency and performance within the venture finance domain. We believe there is clear scope for assisting the venture capital investment process. However, we have identified limitations and challenges in terms of access to data, stage of investment and adoption by industry

Leveraging Predictive Modeling, Machine Learning Personalization, NLP Customer Support, and AI Chatbots to Increase Customer Loyalty

AI, ML, and NLP are profoundly altering the way organizations work. With the increasing influx of data and the development of AI systems to understand it in order to solve business challenges, the excitement surrounding AI has grown. Massive datasets, computer capacity, improved algorithms, accessible algorithm libraries, and frameworks have compelled today's organizations to use AI to enhance their operations and profits. These technologies aid every kind of industry, from agriculture to finance. More specifically, AI and ML, and NLP are assisting organizations in areas such as customer service, predictive modeling, customer personalization, picture identification, sentiment analysis, offline and online document processing. The purpose of this study was twofold. We first review the several applications of AI in business and then empirically test whether these applications increase customer loyalty using the datasets of 910 firms around the world.  The datasets include the integration scores of four different AI features, namely, AI-powered customer service, predictive modeling, ML-powered personalization, and natural language processing integration. The target is the customer loyalty measure as binary. All the features are measured on a 5-pint Likert scale. We applied six different supervised machine learning algorithms, namely, Logistic regression, KNN, SVM, Decision Tree, Random Forest, and Ada boost Classifiers. the performance of each algorithm was evaluated using confusion matrices and ROC curves. The Ada boost and logistic classifiers performed better with test accuracies of 0.639 and 0.631, respectively. The decision tree and KNN had the performance with accuracies of 0.532 and 0.570, respectively.  The findings of this study highlight that by incorporating AI, ML, and NLP, businesses may analyze data to uncover what's useful, gaining valuable insights that can be used to automate processes and drive business strategies. As a result, firms that wish to remain competitive and increase customer loyalty should adopt them

Development and research of algorithms for determining user preferred public transport stops in a geographic information system based on machine learning methods

В работе рассматривается задача определения предпочитаемых пользователем остановок в рекомендательной транспортной системе. Проведено сравнение эффективности использования различных методов машинного обучения для решения указанной задачи в системе персонализированных рекомендаций: метода опорных векторов, дерева решений, случайного леса, AdaBoost, алгоритма k-ближайших соседей, многослойного персептрона. Сравнение указанных традиционных методов машинного обучения производилось также с предложенным методом, разработанным на основе алгоритма вычисления оценок. Экспериментальные исследования использовали реальные данные мобильного приложения «Прибывалка-63», являющегося частью сервиса tosamara.ru. Подтверждена как работоспособность, так и эффективность предложенного метода. The paper considers a problem of determining the user preferred stops in a public transport recommender system. The effectiveness of using various machine learning methods to solve this problem in a system of personalized recommendations is compared, including a support vector method, a decision tree, a random forest, AdaBoost, a k-nearest neighbors algorithm, and a multi-layer perceptron. The described traditional methods of machine learning are also compared with the method proposed herein and based on an estimate calculation algorithm. The efficiency and the effectiveness of the proposed method are confirmed in the work.Работа финансировалась Министерством науки и высшего образования Российской Федерации (уникальный идентификатор проекта RFMEFI57518X0177)

Recent Advances in Social Data and Artificial Intelligence 2019

The importance and usefulness of subjects and topics involving social data and artificial intelligence are becoming widely recognized. This book contains invited review, expository, and original research articles dealing with, and presenting state-of-the-art accounts pf, the recent advances in the subjects of social data and artificial intelligence, and potentially their links to Cyberspace

Will they take this offer? A machine learning price elasticity model for predicting upselling acceptance of premium airline seating

Employing customer information from one of the world's largest airline companies, we develop a price elasticity model (PREM) using machine learning to identify customers likely to purchase an upgrade offer from economy to premium class and predict a customer's acceptable price range. A simulation of 64.3 million flight bookings and 14.1 million email offers over three years mirroring actual data indicates that PREM implementation results in approximately 1.12 million (7.94%) fewer non-relevant customer email messages, a predicted increase of 72,200 (37.2%) offers accepted, and an estimated $72.2 million (37.2%) of increased revenue. Our results illustrate the potential of automated pricing information and targeting marketing messages for upselling acceptance. We also identified three customer segments: (1) Never Upgrades are those who never take the upgrade offer, (2) Upgrade Lovers are those who generally upgrade, and (3) Upgrade Lover Lookalikes have no historical record but fit the profile of those that tend to upgrade. We discuss the implications for airline companies and related travel and tourism industries.© 2023 The Author(s). Published by Elsevier B.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).fi=vertaisarvioitu|en=peerReviewed

A novel evaluation framework for recommender systems in big data environments

Henriques, R., & Pinto, L. (2023). A novel evaluation framework for recommender systems in big data environments. Expert Systems with Applications. https://doi.org/10.1016/j.eswa.2023.120659---We gratefully acknowledge the support of Aptoide in providing access to the data which made this project possible. This work was supported by national funds through FCT (Fundação para a Ciência e a Tecnologia), under the project—UIDB/04152/2020—Centro de Investigação em Gestão de Informação (MagIC)/NOVA IMS.Recommender systems were first introduced to solve information overload problems in enterprises. Over the last few decades, recommender systems have found applications in several major websites related to e-commerce, music and video streaming, travel and movie sites, social media, and mobile app stores. Several methods have been proposed over the years to build recommender systems. However, very little work has been done in recommender system evaluation metrics. The most common approach to measuring recommender system’s performance in offline settings is to employ micro or macro averaged versions of standard machine-learning measures. Profit or other business-oriented metrics have been proposed for other predictive analytics problems, such as churn prediction. However, no such metrics have emerged for the recommender system context. In this work, we propose a novel evaluation metric that incorporates information from the online-platform userbase’s behavior. This metric’s rationale is that the recommender system ought to improve customers’ repeatead use of an online platform beyond the baseline level (i.e. in the absence of a recommender system). An empirical application of this novel metric is also presented in a real-world mobile app store, which integrates the dynamics of large-scale big data environments, which are common deployment scenarios for these types of recommender systems. The resulting profit metric is shown to correlate with the existing metrics while also being capable of integrating cost information, thereby providing an additional business benefit context, which allows us to differentiate between two similarly performing models.publishersversionepub_ahead_of_prin