A Big Data Mining Approach of PSO-Based BP Neural Network for Financial Risk Management With IoT

Abstract

In recent years, the technology about IoT (Internet of Things) has been applied into finance domain, and the generated data, such as the real-time data of chattel mortgage supervision with GPS, sensors, network cameras, mobile devices, etc., has been used to improve the capability of financial credit risk management of bank loans. Financial credit risk is by far one of the most significant risks that commercial banks have to face, however, when confronting to the massively growing financial data from multiple sources including Internet, mobile networks or IoT, traditional statistical models and neural network models might not operate fairly or accurately enough for credit risk assessment with those diverse data. Hence, there is a practical need to establish more powerful risk prediction models with artificial intelligence based on big data analytics to predict default behaviors with better accuracy and capacity. In this article, a big data mining approach of Particle Swarm Optimization (PSO) based Backpropagation (BP) neural network is proposed for financial risk management in commercial banks with IoT deployment, which constructs a nonlinear parallel optimization model with Apache Spark and Hadoop HDFS techniques on the dataset of on-balance sheet item and off-balance sheet item. The experiment results indicate that this parallel risk management model has fast convergence rate and powerful predictive capacity, and performs efficiently in screening default behaviors. In the meanwhile, the distributed implementation on big data clusters largely reduces the processing time of model training and testing.

Keywords

• Big data
• artificial intelligence
• financial risk management
• Internet of Things
• particle swarm optimization
• BP neural network