Advances on financial technology

© 2020 EPFL

© 2020 EPFL

This year, due to the COVID-19 pandemic, Swissquote's annual conference was exceptionally held online. The program included two distinct themes: digital central bank currency and differential machine learning.

For the first time in eleven years, due to COVID-19, Swissquote's annual conference was held entirely online. Entitled "Swissquote Conference 2020 on Finance and Technology", it brought together approximately sixty auditors on Friday, October 30th, to discuss the topic of technology in the financial sector.

The conference was divided into two presentations. During the first, Morten Linnemann Bech, Head of the Switzerland Centre at BIS Innovation Hub, spoke about digital central bank currency (CBDC), which he sees as "an evolution, not a revolution". Currently being tested by various central banks, particularly in the euro zone, this solution could eventually represent an alternative to traditional currencies, especially in a context where cryptocurrency has been growing in popularity over the last ten years and the use of cash is decreasing drastically in many countries. With common guidelines and regulations, these tools could offer many advantages, for example in terms of availability, speed of transfers and ease of use.

Various institutions are exploring the possibility of introducing a digital payment instrument backed by a central bank for retail transactions. Some projects are considering the use of block chain technologies, while others rely on more traditional account-based methods. Of course, all these methods would need to take into account and integrate cross-border dimensions.

Better forecasting the future

Presented by Antoine Savine and Brian Huge, both analysts at Danske Bank, the second presentation dealt with a more technical subject: differential machine learning. In short, this method consists, via models and simulations, of combining machine learning and automatic differentiation (an approach that allows the numerical evaluation of the derivative of a function specified by a computer program), in order to generate future scenarios and, consequently, to make the right decisions today. Applying this approach, the two experts developed the Superfly system, which significantly improves the forecasting of prices, risks and hedging.

Finance and Technology Research Program

Organized by the Swissquote Chair in Quantitative Finance and the Swiss Finance Institute @ EPFL, this year’s edition was also an opportunity to highlight the Finance and Technology Research Program, inaugurated last year. “This is an interdisciplinary research program at the intersection of finance and technology," explains Damir Filipovic, head of the Chair. It aims to foster long-term synergies between these two fields, but also to develop new-generation applications, providing answers to the challenges raised by new developments in the financial sector and accelerate research and training in finance by relying on EPFL's expertise.