Nearly all players in capital markets believe that AI is critical to their future success. However, AI adoption also poses serious, even existential, risks for enterprises that misapply the technology. To capitalize on the opportunities of AI while mitigating its risks, participants in capital markets need explainable AI (“XAI”). XAI is AI that makes predictions, recommendations, and decisions that humans can audit, understand, explain, and, crucially, trust.
A leading North American Bank worked with causaLens to apply Causal AI to build explainable models that mitigate and manage trading risk. The project focused on generating alpha from news sentiment data — Causal AI enabled significantly greater explainability while also inflecting PnL outcomes for trading strategies.