A Hypothesis on Good Practices for AI-based Systems for Financial Time Series Forecasting: Towards Domain-Driven XAI Methods

• URL: http://arxiv.org/abs/2311.07513v1
• Date: Mon, 13 Nov 2023 17:56:45 GMT
• Title: A Hypothesis on Good Practices for AI-based Systems for Financial Time Series Forecasting: Towards Domain-Driven XAI Methods
• Authors: Branka Hadji Misheva and Joerg Osterrieder
• Abstract summary: Machine learning and deep learning have become increasingly prevalent in financial prediction and forecasting tasks. These models often lack transparency and interpretability, making them challenging to use in sensitive domains like finance. This paper explores good practices for deploying explainability in AI-based systems for finance.
• Score: 0.0
• License: http://creativecommons.org/licenses/by/4.0/
• Abstract: Machine learning and deep learning have become increasingly prevalent in financial prediction and forecasting tasks, offering advantages such as enhanced customer experience, democratising financial services, improving consumer protection, and enhancing risk management. However, these complex models often lack transparency and interpretability, making them challenging to use in sensitive domains like finance. This has led to the rise of eXplainable Artificial Intelligence (XAI) methods aimed at creating models that are easily understood by humans. Classical XAI methods, such as LIME and SHAP, have been developed to provide explanations for complex models. While these methods have made significant contributions, they also have limitations, including computational complexity, inherent model bias, sensitivity to data sampling, and challenges in dealing with feature dependence. In this context, this paper explores good practices for deploying explainability in AI-based systems for finance, emphasising the importance of data quality, audience-specific methods, consideration of data properties, and the stability of explanations. These practices aim to address the unique challenges and requirements of the financial industry and guide the development of effective XAI tools.

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