South Korea’s financial watchdog is seeking applications to select a business to develop an artificial intelligence (AI) system to support human decision making in examining terms and conditions of new private equity funds which grow in size and number.

The Financial Supervisory Service (FSS) said the move aims to increase its efficiency and speed of screening contracts of new PEFs and the open bidding bidding will be completed this month to apply the AI system next year.

South Korea has seen an explosive rise in the number of PEFs since the government’s policy overhaul in 2015. Last year alone, 6,852 new PEFs were reported, the FSS said.

The latest project involves applying AI technology to a PEF evaluation process based on a pilot program completed last November. The project aims to add efficiency in the overall fund examination process by having AI judge the adequacy of reported terms and conditions automatically.

Machine reading comprehension will be applied to the screening system where an AI algorithm is tasked with analyzing data and proposing and inferring an optimum answer to a predefined query.

The FSS plans to re-analyze PEF reports submitted by financial institutions to establish learning data based on questions and answers and provide a system in which an AI engine is able to judge adequacy of future terms and conditions through guided learning.

By Jin Young-tae and Lee Eun-joo

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