Page 210 - Building Big Data Applications

210 Building Big Data Applications

product’s functionality. In this way, customers benefit from AI without having to un-
derstand it, or even know it is there. On-staff expertise is no longer required and,
certainly, all the rigors of doing machine language work, like algorithm selection and
“feature engineering” become the responsibility of the software or service company
responsible for the product itself.
That division of labor, where the vendor does the hardest work and the customer
consumes the output of that effort, is how technologies become mainstream, have the
greatest impact on business, and benefit the most people in the organization. And its
advances in applied AI where analysts, journalists, customers and, indeed, vendors, and
product managers need to focus.

Compliance and regulations

1. Basel Committee on Banking Supervision (BASEL III and BASEL IV)
1. The Basel Committee rolled out BASEL III, its third set of regulator frameworks
around capital and liquidity, in 2010, and is in the process of drafting an upda-
ted Basel IV which will likely require higher capital requirements and increased
financial disclosure. Basel III and IV share similar goals to Dodd-Frank in that
they seek to ensure banks have enough capital on hand to survive significant
financial losses, although they differ in the amounts required. The rules estab-
lish numerous rules such as Capital-to-Assets Ratio (CAR), Liquidity Coverage
Ratio (LCR) and Net Stable Funding Ratio (NSFR) requirements. To meet those
requirements, financial service firms again must step up their data reporting
and risk management capabilities.
2. Comprehensive Capital Analysis and Review (CCAR)
1. Spurred by the financial crisis, under the auspices of the Federal Reserve, CCAR
mandates certain comprehensive reporting be conducted annually. Effectively,
CCAR requires banks to conduct “stress tests” that prove they can “weather the
storm” if they were to face the same type of financial challenges experienced
during the Great Recession. Banks are then required to report the findings of
those tests to regulators.
3. Dodd-Frank Wall Street Reform and Consumer Protection Act
1. Signed into federal law in 2010, the Dodd-Frank act is a complex piece of legis-
lation passed as a direct response to the financial crisis. Its purpose was to pro-
mote “the financial stability of the United States by improving accountability
and transparency in the financial system,” according to the law’s text.
Practically speaking, the law implemented standards to limit risk-taking, in-
crease data transparency and improve the efficiency with which data is aggre-
gated and reported to regulators. According to Davis Polk, around 72% of the
390 proposed rules in Dodd-Frank have been met with finalized rules. Rules