Developing generative recommender systems for government subsidy programs with a new RQ-VAE model: Wello and the Korean government case

Abstract

According to an industry survey, many people miss opportunities to apply for government subsidy programs because they do not know how to apply. People also need to search manually and check whether these programs are suitable for them. To address this issue, our study developed a new generative recommender system with both users' information and government subsidy documents. Within our recommender system framework, we modify the existing Residual Quantization Variational Auto-Encoder (RQ-VAE) model to capture deep and abstract information from subsidy documents. Using semantic IDs generated for approximately 185,610 user click-stream histories and 240,000 documents, we train our recommender system to predict the semantic IDs of the next subsidy policy documents in which a user might be interested. In 2024, we successfully deployed our generative recommender system in Wello, a Korean Gov-Tech startup. In collaboration with the Korean government, our generative recommender system helped enhance program effectiveness by saving $7.8 million in unused funds and achieved $27.4 million in advertising efficiency gains. Also, Wello observed a 68% improvement in Click-Through-Ratio (CTR), increasing from 41.4% in the third quarter of 2024 to 69.6% in the fourth quarter of 2024. We thus anticipate that our generative recommender system will have a significant impact on both individuals and the government.