Proof of Concept Study for Derivative Contract Operations
Nomura Research Institute, Ltd. (NRI), a leading provider of consulting services and system solutions, in collaboration with Mizuho Bank, Ltd., today announced the completion of a proof-of-concept (PoC) project developed to examine the applications of artificial intelligence (AI) solutions for derivative contract operation.
Mizuho executives made the improvement of the operational efficiency of derivative contract procedures a priority and approached NRI to develop a test in which the bank could examine how AI solutions could address this need. Traditionally, the standard derivative contract procedure at Mizuho included the exchange of print ISDA contracts with clients via FAX and PDF and the manual archiving of all the information. As each contract contains an enormous amount of information that is unique to each individual contract, registering the information to the system and referring to past contracts requires not only specialized knowledge but also a large amount of time-consuming manual input.
The PoC confirmed that OCR (Optical Character Recognition) can digitize ISDA contracts and the system can define, extract, and archive the sum total of information from the digitized contract into a format that can be easily accessed and searched after the fact. As a result, the time it takes for analysts to register ISDA contract information into the system and refer to past information is significantly decreased.
“We are excited to continue to develop new AI applications for functions across the financial industry with partners like Mizuho,” said Hiroyuki Nakayama, General Manager of Financial Business Planning Division of NRI. “NRI is at the forefront of AI research and develop for the financial services sector in Asia, and we continue to learn new and exciting applications for the technology that we are seeking to implement further through strong partnerships.”
Masahiro Ueki, Senior Vice President of Legal and Compliance Team and Global Markets Coordination Department at Mizuho said, “In addition to the improved operation efficiency brought by the AI implementation, we expect these exciting new systems can also maintain a high-level understanding of ISDA contract operations across the board.” Based on the PoC results, Mizuho intends to continue working with NRI to develop a full-fledged system solution for all derivative contract operations.
NRI has been researching and conducting PoC for AI applications in document management, including contracts and payment record processing. NRI recently evaluated the iManage RAVN AI platform to automatically extract data from thousands of ISDA contracts. iManage automates routine cognitive tasks, provides powerful insights and streamlines how professionals work, while maintaining the highest level of security and governance over critical client and corporate data.
Mizuho Bank, Ltd. is a financial institution registered with the Director of Kanto Local Finance Bureau (Tokin) No.6, and a member of Japan Securities Dealers Association, The Financial Futures Association of Japan and Type II Financial Instruments Firms Association.
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