Intelligence can be securely shared across multiple entities, improving collaboration. This helps enhance AI models for boosting productivity and detecting cross-border financial crimes, while also enabling proactive measures to prevent illegal activities.

This methodology aligns with the latest global regulations, including the EU AI Act and onshoring requirements in countries like Singapore and Australia.

The design of the patented technology was born out of Lucinity’s research and development division, Lucinity Labs, which had been looking for a way to strengthen the financial services ecosystem while complying with data sharing laws.

This innovation was applied during a project with the Bank for International Settlements (BIS) Innovation Hub’s Nordic Centre that explored privacy-enhancing technologies and enhanced cooperation across institutions and borders.

“We believe in bringing connectivity to parts of the world where it wasn’t possible before. The biggest thing holding back adoption of advanced AI systems is the global concern over data security. Now, with our patented technology, algorithms from one market can share essential learnings with another market, and the data remains safe, private, and secure,” says Guðmundur Kristjánsson, CEO and Founder of Lucinity.

This federated learning patent, combined with Lucinity’s Generative AI technology, will unlock unprecedented intelligence in financial services, enabling more precise, efficient, and secure data analysis for combating financial crime.

As well as breaking down barriers in financial crime prevention, there is huge potential for federated learning to be applied in other sectors that handle sensitive data such as healthcare, DNA research, and pharmaceutical practices.

“The possibilities to apply this federated learning patent are endless. It will exponentially increase our capacity to utilize and learn from data like never before,” says Kristjánsson.

Lucinity has been at the forefront of AI technology since its inception. The company also received a patent in 2022 for another piece of AI, their Secure Lockbox, which features pioneering  homomorphic encryption of data. This patent enables Lucinity to encrypt all personally identifiable information (PII) while still using PII as an input into AI in its encrypted form.

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Peak originally announced its intention to acquire Zhongke back in December 2020 with the signing of a memorandum of understanding (“MOU”). The signing of the MOU was followed by a pilot financing program where Zhongke’s software, paired with elements of Peak’s Lending Hub, was used by one of Zhongke’s banking clients to provide capital to help restaurant owners in Sihong County manage their short-term cash flow. The pilot project was conducted under a newly created entity called Weilian Technology Services Ltd. (http://weelian.com.cn/) (“Weilian”). From the beginning of April through the end of June 2021, 123 suppliers provided food, products and related services to 329 restaurants in 675 separate transactions totalling roughly 2.5M RMB (about CAD$480,000), all financed by Jiangsu Sihong Rural Commercial Bank (http://www.shnsyh.com/) through the pilot.

Deeming the pilot successful, Zhongke transferred the IP used to create the services to Weilian. Peak, in turn, will allocate up to CAD$1M in R&D for the integration of the services to its Lending Hub ecosystem and for the continued development of synergies between Zhongke’s applications and its own. Peak will also contribute an additional CAD$3M in working capital and marketing budget related to the expansion of Weilian’s service offerings to other industries. Weilian’s services will continue to focus primarily on short-term micro loans (typically less than CAD$1,000), another under-served market where the Company sees an opportunity to attract more business to its ecosystem. Zhongke initially retained a 49% stake in Weilian, while Peak has a 51% controlling interest in the company until Peak either acquires Zhongke itself or the 49% stake owned by Zhongke.

Zhongke’s analytics and AI software is used by banks and financial institutions in China to process, manage and make decisions on loan and credit applications. In addition to Jiangsu Sihong Rural Commercial Bank, two of the other 42 banks who currently use Zhongke’s software have already signed up for the financing program operated by Weilian. The others are expected to be added over time and all will be presented with other lending opportunities as part of the Lending Hub membership, which will further expand the ecosystem’s lending capacity.

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The post Peak Fintech Acquires Banking AI Software Provider Zhongke first appeared on FinTecBuzz.