A user guide of CART and random forests with applications in FinTech and InsurTech

Abstract In the realm of financial data analytics, machine learning techniques, particularly classification and regression trees (CARTs) and random forests, have shown remarkable efficiency. This article serves as a user guide for these methods, with an emphasis on their applicability and effectiveness in analyzing datasets in FinTech and InsurTech. In particular, we present several numerical examples and empirical studies, and demonstrate their superiority in handling data with a variety of input features, offering insights into their potential applications in the industries.