Bank of America announced a collaboration with the MIT Sloan School of Management's Laboratory for Financial Engineering (LFE) that will utilize cutting-edge financial analysis to drive innovation in financial services. This collaboration is part of the Center for Future Banking created at the MIT Media Lab in March. 

The funding for the LFE will support multiple quantitative research efforts that have been jointly developed by the Bank and the LFE. The research themes cover a diverse set of opportunities around computational finance, quantitative analytics and risk-reward tradeoffs. Andrew Lo, a leading figure in financial theory and practice, will direct this research agenda. This collaboration will enable Bank of America to get an early look at game-changing research that is important not only to banking activities, but also towards improving the banking experience of its customers.

LFE Director and MIT Sloan Professor Andrew Lo said information provided by the Bank will enable the LFE to develop and analyze theoretical models of the current market environment, including the recent turmoil in credit markets and the hedge-fund industry. "We seek to engage in research that is both rigorous and relevant," said Lo. "The best way to do that is by working directly with industry to take on research challenges that have significant implications for both theory and practice."

Bank of America Chief Investment Officer Walter Muller, himself a MIT alumnus, said that he was looking forward to the opportunity to work with Andrew Lo and his team at the LFE. "I have deep respect for Andrew's work. He brings to the table a perspective that is not just focused on theoretical frameworks, but also their practical application. This collaboration has the potential to re-shape how the financial services industry looks at building out their next-generation quantitative capabilities."

The Center for Future Banking is located at the Media Lab on the MIT campus and directed by Professor Deb Roy, chair of MIT's academic program in Media Arts and Sciences and a pioneer in cognitive modeling, communication theory, and human-machine interaction. An onsite team from Bank of America, headed up by Bank of America's Center for Future Banking Executive Jeff Carter, works closely with MIT Sloan researchers on these initiatives.