IE School of Science & Technology and the Department of Mechanical Engineering at the University of California, Berkeley, have launched a research initiative to explore digital twin applications in financial systems.
The project falls under the IEX Research Xcelerator and aims to develop simulations that provide a system-level understanding of market dynamics, policy impacts, and systemic risk.
Digital twins are real-time virtual replicas of complex systems and are widely used in fields such as manufacturing and aerospace. This project seeks to bring the same modeling capabilities to global finance.
The research is led by Tarek Zohdi, professor of mechanical engineering at UC Berkeley and director of the Multiphysics Simulation and Optimization Lab, and Ikhlaq Sidhu, dean of IE School of Science & Technology. The initiative is also the first formal project under the MEFIC Chair on AI & Data-Driven Financial Investments.
Use cases include risk modeling and liquidity simulations
Initial research areas will include financial contagion modeling, decentralized treasury operations, digital trading of physical assets, and real-time liquidity routing. The tools developed will combine artificial intelligence, machine learning, and optimization techniques to support decision-making under complex conditions.
Zohdi says, “Digital-twin technologies give us the ability to anticipate, not just react. By replicating complex systems virtually, we can test policy decisions, design resilient infrastructure, and reduce exposure to systemic risk—before adverse consequences materialize. Collaborating with IE through the IEX initiative offers a rare opportunity to bring this work into a global context in order to connect advanced modeling with real, measurable effect.”
Sidhu adds, “We look forward to working with Professor Zohdi. His systems approach to modeling aligns with our vision to advance theoretical research while building tools that directly impact industry and society.”
Broader research themes and strategic alignment
The project supports IE University’s broader research focus and commitment to innovation in finance and complex systems. Zohdi will also join the IEX Think Tank, which addresses interdisciplinary themes such as AI, sustainability, and public infrastructure.
The collaboration is expected to produce white papers for industry and policymakers, exploring topics such as digital asset exchange, precision agriculture, the hydrogen economy, and infrastructure risk. The simulations aim to enable better forecasting and policy testing within financial networks.
The research team plans to develop high-speed simulation tools using machine learning and design optimization methods. These will be designed for scalability and real-time analysis.
Sidhu concludes, “His work aligns with our vision to advance theoretical research while developing tools that directly and positively impact industry and society.”
