THE ‘TECH’ BEHIND FINTECH

A new R&D laboratory in the Faculty of Engineering is bringing together expertise on blockchain, algorithms, security and more to explore new frontiers in financial technology.

Dr S M Yiu is the Director of HKU’s new FinTech Lab, which has been launched with a US$400,000 private donation and will bring together computer science and other scholars to translate the University’s findings into industrial applications.

Dr Yiu has been working extensively in computer security and cryptography and will lead the lab in exploring some of the most promising areas in the artificial intelligence (AI) and data analysis that underpin financial technology.

One of these is blockchain, which decentralises data distribution without the need of a trusted authority. Dr Yiu has been working on a platform that enables data to be traded directly between parties rather than the costlier route of going through such an authority. The data has to be encrypted to protect privacy and copyright, which can make it difficult to extract the data easily, but he has been developing a workaround.

“We are building a better platform that encrypts the data but has a library on top of it that lets people do calculations or extract certain statistics from the encrypted data. It lets you get results without needing all the underlying data.” The idea is somewhat akin to publishing the findings of research but not the raw data, and letting others use the findings for their own purposes. As Dr Yiu pointed out, businesses often do not need every scrap of data about people to calculate such things as their preferred style of smartphone.

New start-up

Another area he and his team are looking at is ‘algo-trading’ – using algorithms to guide financial trades. He and a former PhD student have developed an AI engine that uses historical data to predict the best dozen or so stocks to buy and sell within a given period. Unlike human financial advisors who might review portfolios with clients every few months, this AI agent can give a timely report and signal if the portfolio mix should be changed. Dr Yiu and his student have formed a new start-up, Brain Investing Limited, which has received RMB 4 million from a private investor.

A third area that has Dr Yiu’s attention is security, in particular fraud. He has started a project to analyse how people use Bitcoin to determine if they are using it for money laundering. Preliminary results show there are unusual transactions, which will be probed further. In future, the FinTech Lab may also look at big data analysis and natural language processing.

“Our main focus is to bring HKU research to the FinTech industry,” he added – something that will also include launching a new massive open online course on blockchain technology in 2019.