Like all sectors of the economy, the financial sector is facing major challenges today: Digital technologies such as artificial intelligence and blockchain systems are bringing fast-paced changes, but sustainability and social responsibility are also becoming more and more important. How can the world of finance master this balancing act?

“We’re seeing a great need for research in the field of digital finance,” says Ronald Hochreiter from WU Vienna’s Research Institute for Computational Methods. “What’s needed most is research on the real-life issues that the world of finance is facing today.”

To fill this need, WU Vienna has joined forces with other universities, research institutions, and financial sector companies across Europe to launch a new, EU-funded research initiative: the MSCA Digital Finance PhD program – or DIGITAL for short.

In the DIGITAL program, a total of 19 doctoral students will work over the next four years to explore solutions to the biggest challenges facing the world of finance today. “We need people with a completely different skillset than that required for the usual academic programs in finance,” explains Ronald Hochreiter, who represents WU Vienna in the project. “Of course, our students must have strong financial expertise, but even more importantly, they must know how to use modern technologies in innovative ways.”

Five key research areas

The program covers five specific research areas that are central to the future of the European financial sector:

• Towards a European financial data space: Better networking between European financial centers would make it easier to predict trends and crises. With sufficient data, researchers could also simulate macro scenarios to forecast inflation or unemployment rates far more accurately than has previously been possible.

• Artificial intelligence for financial markets: Machine learning is to be used to strengthen the risk management of European financial service providers, and new AI methods are to be employed in automated trading to make the European financial system more efficient and robust. This research area is headed by Ronald Hochreiter from WU.

• Towards explainable and fair AI-generated decisions: Decisions made by AI are often difficult for humans to understand, and they can be subject to biases. Better design approaches are needed to improve the transparency and fairness of artificial intelligence in the financial sector.

• Driving digital innovations with blockchain applications: European industry standards are to be developed for blockchain technologies, which form the basis of cryptocurrencies such as Bitcoin. A risk index for cryptocurrencies and improved fraud detection are to be developed to ensure greater security in this area.

• Sustainability in digital finance: A “green credit score” and an automated recommendation system for investments are to be implemented to promote sustainable technologies. At the same time, research is to be conducted to make AI technologies used in the financial industry less energy-hungry and more efficient.

What makes DIGITAL so special is the underlying approach, which focuses on research projects carried out in collaboration with companies from the financial sector and leading research institutions. During their training, the doctoral students also get a job at a fintech start-up, bank, or other financial service provider. The aim is to close the gap between academia and the industry. “There’s a lot of basic research on AI-related topics being done here at WU Vienna,” Ronald Hochreiter points out. “But it’s often hard to put the insights gained into practice in the financial sector. And this is exactly where DIGITAL comes in,” Hochreiter says.

The search for bright minds to carry out the research has already begun, and calls for applications have been issued to fill the 19 PhD positions. Each of them means four years of cutting-edge research to help build the financial industry of tomorrow. “In the future, it might even be an option to turn this initiative into a regular degree program. There’s certainly no lack of demand in the industry, that’s for sure,” says Ronald Hochreiter.

Further information

MSCA Digital Finance website

The MSCA Digital Finance program is funded by the Marie Skłodowska-Curie Actions, the European Union’s flagship program for supporting doctoral education and postdoc training, with the goal of strengthening Europe’s capacity for research and innovation.