Research on the Evolution Characteristics and Prevention Mechanisms of Financial Risks Driven by Smart Financial Technologies

Hangle Zhou ()
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Hangle Zhou: University College London

A chapter in Proceedings of the 2025 5th International Conference on Enterprise Management and Economic Development (ICEMED 2025), 2025, pp 826-833 from Springer

Abstract: Abstract In the age of digital transformation, intelligent financial technology encompasses artificial intelligence (AI), Big Data Analysis, blockchain, and machine learning. The efficiency and availability of financial services are increasing, and risks take on unprecedented characteristics. This study examines the evolution of financial risks in technological disruptions, combining global sets of financial data and a regulatory framework for empirical analysis.After qualitative comparison and quantitative modeling, three characteristics of risk evolution were identified: (1)complexity was increased, and Risk Factors in an intelligent financial system increased by 40% compared to traditional adjustment, and interdependence increased by 60% (see Table 1); (2) the spread of risk has accelerated, and the algorithmic trading network has reduced the spread of market risks from 24 h to 2–3 h (IMF, 2024); (3) blockchain-related cyber attacks and a 15% increase in algorithmic risks. Deviations in credit ratings of ethnic minorities (Scholtens, 2024). 2023; Pagnotta, 2023). To address these challenges, a prevention system was developed within this study in three areas: regulatory technology (regtech) uses artificial intelligence to monitor transactions in real time, and the accuracy of detecting fraudulent activities can be increased up to 92%; advanced data management integrates data lifecycle management in accordance with GDPR and risks privacy is significantly reduced in big data analysis; the hybrid risk assessment model combines credit scores with alternative data (as what a empirical analysis of 50 banks around the world shows is between 2021.and 2023. Year, so that the number of incidents related to operational risk in an organization related to the implementation of this system was reduced by 35%. Combining technological innovation and risk management resilience, the research provides a theoretical framework for Adaptive Risk Management and provides practical information to regulators. Shortens the time period between innovation in financial technology and regulatory response (18 months) (Zetzsche et al.2007)., 2024). The results of this study emphasize that in the age of intellectual finance, a proactive technology-based strategy needs to be implemented to ensure sustainable financial development.

Keywords: Smart Financial Technologies; Financial Risk Evolution; Systemic Risk; Adaptive Risk Management (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-811-0_89

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DOI: 10.2991/978-94-6463-811-0_89

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