E156 ‘Bridging Actuarial Science and Data Science’ with Pedro Ecija Serrano

Today’s guest is Pedro Ecija Serrano, a seasoned expert in Actuarial Science, Data Science and AI Ethics. In the ever-evolving world of data science and AI, the intersection with traditional fields like actuarial science offers fascinating insights. In this episode, Pedro discusses the dynamic relationship between these fields and the innovative ways in how it’s shaping the financial services industry.

Pedro’s journey into the world of data science began with a solid foundation in actuarial science, a field that has long been associated with rigorous statistical analysis and modeling. Reflecting on his early career, Pedro shared how he entered the actuarial field during a recession in Spain, driven by the promise of job security and the intellectual challenges the field presented.

Despite the common perception of insurance as a dull industry, Pedro discovered the fascinating complexities within actuarial work. “Insurance might have a bad reputation for being boring but once you’re inside, it’s truly fascinating. The problems we solve have a significant impact on society,” Pedro noted.

As the conversation progressed, Pedro and Mark delved into how actuarial science and data science have increasingly converged. The actuarial field has always involved sophisticated modeling techniques, many of which are now central to data science and AI. However, Pedro pointed out that while the tools have evolved, the core principles remain the same.

Pedro also touched on the ethical considerations that come with this convergence. In highly regulated industries like insurance, the integration of AI requires a careful balance between innovation and compliance. Actuaries, who have long been stewards of risk management, are naturally positioned to navigate these challenges.

While insurance might not seem as innovative as other industries, Pedro highlighted that much of the innovation happens behind the scenes. From advanced mortality modeling powered by AI to sophisticated customer segmentation techniques, the industry is continuously evolving. However, Pedro acknowledged that the insurance sector has not always been effective at communicating these innovations to the public.

“The insurance industry has seen tremendous innovation, especially in areas like mortality modeling,” Pedro shared. “These changes happen behind the scenes so consumers may not always notice them directly. The real impact is in how companies operate and make decisions, often in ways that greatly benefit society, even if they’re not immediately visible.”

Pedro’s current focus is on helping financial services companies adopt AI in a strategic way. He emphasises that the key to successful AI integration is aligning projects with the company’s overall strategy and business goals. Rather than jumping on the latest technological trends, Pedro advises companies to think critically about what they are trying to achieve and how AI can best support those objectives.

“A lot of times, companies are eager to implement AI because it’s the hot topic,” Pedro said. “My role is to step back and ask, ‘Does this make sense based on your strategy? Is there a simpler solution that might be more effective?’ AI should serve the business, not the other way around.”

Pedro’s approach often involves helping companies build frameworks that allow them to identify and prioritise AI projects that align with their strategic goals. This ensures that AI initiatives are not just innovative, but also practical and impactful.

Given the highly regulated nature of financial services, ethical considerations are always top of mind. Pedro highlights the importance of balancing innovation with compliance and ethical responsibility. In financial services, where the stakes are high, ensuring that AI models are not only effective but also fair and transparent is crucial.

As a judge for the 2024 AI Awards, Pedro is excited to see the creativity and variety in how companies are using AI to solve business challenges. He looks forward to evaluating projects that not only push the boundaries of what’s possible with AI but also demonstrate a clear ethical and strategic vision.

In conclusion, Pedro’s insights underscore the importance of a thoughtful, strategic approach to AI in financial services. By blending the rigor of actuarial science with the innovation of data science, companies can navigate the complexities of AI adoption while maintaining a focus on ethical responsibility and strategic alignment. As AI continues to transform industries, the lessons from fields like actuarial science will be invaluable in ensuring that these technologies are used wisely and effectively.