# Better with Less: Small Proprietary Models Surpass Large Language Models in Financial Transaction Understanding

arXiv: https://arxiv.org/abs/2509.25803 · HTML: https://mlsanity.com/paper/2509.25803/

## Key facts

- No citing papers in the map yet (data through 14 Oct 2026).
- Builds on 15 of its 21 references that are in the map.
- First posted on arXiv 30 Sep 2025.

## Builds on (most cited first, 15 of 15)

- [Attention Is All You Need](https://mlsanity.com/paper/1706.03762/) (2017)
- [BERT: Pre-training of Deep Bidirectional Transformers for Language Understanding](https://mlsanity.com/paper/1810.04805/) (2018)
- [Language Models are Few-Shot Learners](https://mlsanity.com/paper/2005.14165/) (2020)
- [LLaMA: Open and Efficient Foundation Language Models](https://mlsanity.com/paper/2302.13971/) (2023)
- [Sentence-BERT: Sentence Embeddings using Siamese BERT-Networks](https://mlsanity.com/paper/1908.10084/) (2019)
- [QLoRA: Efficient Finetuning of Quantized LLMs](https://mlsanity.com/paper/2305.14314/) (2023)
- [Neural Machine Translation of Rare Words with Subword Units](https://mlsanity.com/paper/1508.07909/) (2015)
- [FaceNet: A Unified Embedding for Face Recognition and Clustering](https://mlsanity.com/paper/1503.03832/) (2015)
- [Optuna: A Next-generation Hyperparameter Optimization Framework](https://mlsanity.com/paper/1907.10902/) (2019)
- [Google's Neural Machine Translation System: Bridging the Gap between Human and Machine Translation](https://mlsanity.com/paper/1609.08144/) (2016)
- [MiniLM: Deep Self-Attention Distillation for Task-Agnostic Compression of Pre-Trained Transformers](https://mlsanity.com/paper/2002.10957/) (2020)
- [BloombergGPT: A Large Language Model for Finance](https://mlsanity.com/paper/2303.17564/) (2023)
- [Subword Regularization: Improving Neural Network Translation Models with Multiple Subword Candidates](https://mlsanity.com/paper/1804.10959/) (2018)
- [Tune: A Research Platform for Distributed Model Selection and Training](https://mlsanity.com/paper/1807.05118/) (2018)
- [FinBERT: A Pretrained Language Model for Financial Communications](https://mlsanity.com/paper/2006.08097/) (2020)

## Abstract (arXiv)

Analyzing financial transactions is crucial for ensuring regulatory compliance, detecting fraud, and supporting decisions. The complexity of financial transaction data necessitates advanced techniques to extract meaningful insights and ensure accurate analysis. Since Transformer-based models have shown outstanding performance across multiple domains, this paper seeks to explore their potential in understanding financial transactions. This paper conducts extensive experiments to evaluate three types of Transformer models: Encoder-Only, Decoder-Only, and Encoder-Decoder models. For each type, we explore three options: pretrained LLMs, fine-tuned LLMs, and small proprietary models developed from scratch. Our analysis reveals that while LLMs, such as LLaMA3-8b, Flan-T5, and SBERT, demonstrate impressive capabilities in various natural language processing tasks, they do not significantly outperform small proprietary models in the specific context of financial transaction understanding. This phenomenon is particularly evident in terms of speed and cost efficiency. Proprietary models, tailored to the unique requirements of transaction data, exhibit faster processing times and lower operational costs, making them more suitable for real-time applications in the financial sector. Our findings highlight the importance of model selection based on domain-specific needs and underscore the potential advantages of customized proprietary models over general-purpose LLMs in specialized applications. Ultimately, we chose to implement a proprietary decoder-only model to handle the complex transactions that we previously couldn't manage. This model can help us to improve 14% transaction coverage, and save more than 13 million annual cost.