accelerated finance and technology leadership

Tapp CommerceSami Leino, Director of Business Development

Accelerated FinanceFrom linear to exponential thinking

Photo: Don McCullough Creative Commons Flickr

Creating faster and more accurate results with accelerated processes.

Exponential Progress

Exponential growth factor

Unexpected results

Expected results

x10

x1000000

Kodak invented CCD technology in 1970’s, too steeped in tradition for change.

1998 Kodak had 170.000 employees, in 2012 filed for bankruptcy.

Business model disappeared in 36 months after 124 years of operation.

Kodak had unwillingness to change, from chemical to electronics company.

Faster Disruption

Digital movement decimated print photos.

Disruption right there!

Apple and Kodak camera in 1994.

Evolution of camera component from $100k to $5.

Source:Wikipedia,PeterDimandis

“40% of Fortune Top500 companies will disappear in a decade.”John Chambers, CEO, Cisco

“50% of jobs in developed countries will be replaced by automation”

Humans are needed to create and operate robotic systems.

AutomationSource:spectrum.ieee.org ExponentialFinance2016

Growth creates complexity and complexity is the killer of growth.

Growth and Complexity

Pre-Industrial Age Industrial Age Post-Industrial Age

“Individual productivity” “Economies of Scale” “Complexity”

Cost

Volume

Cost

Volume

Cost

Volume

Fixed costs Variable costs Complexity costs

Source:WilsonPerumal Company

Law of Accelerated Returns

Processor capacity increased 3000x times in a decade.

1956 2005 2016

Cost of computing decreased x 90k

Exponential growth in computing

Source:D-Wave,Wikipedia,ExponentialFinance2016,publicdomainpictures.net

We are nearing end of Moore’s law.

Size of transistors are reaching physical limits.Transistor per $ has peaked.

End of Moore’s Law

Transistor size

Transistor per $

2000 20122016

2016

Design rule nm

Transistor size

Source:Wikipedia,ExponentialFinance2016http://www.telegraph.co.uk/technology/2016/

Paradigm Shift-Rate

relay

Vacuum tube

Transistors

Integrated circuits

Overall rate of technology development doubles every decade.

1900 1920 1940 1960 1980 2000 2020 2040

Ray Kurzweil - 2001

Three-dimensional(3-D)integrationNanophotonic CommunicationWirelessInterconnectsQuantumComputing

Source:Columbia UniversityNetworks-on-Chip inEmergingInterconnectParadigms:AdvantagesandChallenges

Blockchain

Transaction database & protocol to build, relay and execute financial transactions based on calculated certainty of parties.

Blockchain defies financial institutions steeped in tradition. (Kodak’s unwillingness to change)

• Based on peer-to-peer relationships.• Redefined trust between institutions is based on certainty.• Permanent record storage with never-ending historical tail.• Bitcoin uses transaction chain based on Blockchain.

Exponential Technologies

Financial Productivity - AIArtificial Intelligence, what do we get?Human + pre-reasoned alternatives = Best-of-breed selections

Source:Exponential finance2016

Highperformance

Non biased decisions

Fast operational velocity

No reorganizing departments

24 x 7 operations

No sick leave and whining!

Cutter Room Floor 95/5Deep learning technologies meet AI

• Leverage constant knowledge building.

• Cut 95% of results, refine the 5%, constant recurring results.

• Understand, agree and activate policies for security, liability and ethics.

Focusontop 5%

Constantrefining

Scrap 95%ofresults


Human-in-the-LoopAI guided crowdsourced workflow.

• Tedious tasks are AI controlled.

• AI confidence factor under scrutiny.

• Crowdsourced humans guide AI.

• AI long term independence from crowd-guidance.

Newworkassignment

AIcontrolledprocess

Confidencecalculation

Crowdsourcedguidance

AIcalibration

Source:PeterDimandisblog

House of CatAI functions with unlimited greed, without controlling fear.

Networked drivers are the mice, in the house of cat, today.

• Driver performance under scrutiny.• If a driver starts to drive differently, heading

towards home, AI delivers more profitable rides.

• “Orwellian control, slave to system” -Drivers.

Source:http://www.latimes.com/business/technology/la-fi-tn-uber-arbitration-opt-out-20151211-story.htmlElonmusk

AccelerationBreaking

G-forces

VelocityStyle

Start of day End of tour

Going home

Performance

Rides per hour Trend

Revenues

Days

Hours

Going home? There are new rides for you!

Orientation“Humans may become a mouse in house of a cat?”

Elon Musk

Deep Mind 2015Deep Mind playing Breakout

Experience Level TacticAfter 10min very novice learning gameAfter 30min human level paddle towards ballAfter 60min talented amateur hit rate 80%After 90min professional hit rate 100%After 120min expert level outruns gameAfter 240min creative moves beats the game

From zero to 90min AI outran a human.https://www.youtube.com/watch?v=V1eYniJ0Rnk

Source:TheNewYorkerFeb25,2015,YouTubeMar7,2015.

Challenges – MarketsThe markets are the only real-time real-life lab available.

Source: Networks-on-Chip inEmergingInterconnectParadigms:AdvantagesandChallenges,ExponentialFinance2016

Not possible to repeat theories, for identical environment comparison. Missing comparison value.

Linear thinking and models are about old math.Need for Bayesian models to meet deep learning.

Testing theorems require extensive computing power.No credible way to test sampled models.

Photo:PatrickFinnegan,CreativeCommons

Photo:Silveira Neto,CreativeCommonsPhoto:Thenails Flickr,CreativeCommons

Financial Productivity - Challenges“Most claimed research findings in financial economics are likely false” Prof. Cambell Harvey - President of American Finance Association

Source:Exponential finance2016Americanfinance association,Wikipedia

Heavy machinery needed to solve near real-time market problems.

• Dynamic portfolio analysis

• Scenario analysis

• Derivative pricing

• Real-time stochastic systems

New York Stock Exchange 1908, Wikipedia

1910’s millions of dollars per day

2010’s trillions of dollars per day

Solution – DC to QCFrom Digital Computing to Quantum Computing

Deterministic Computing (DC) cannot simulate probabilistic systems.

Probabilistic systems reflect to real-time markets.

Quantum Computing (QC) can solve this task.


Photo:DWAVEQuantumComputer

Quantum Intro Class


Photo:users.telenet.be/vdmoortel/dirk

Quantum ComputingResearch studies of algorithms and systems related to quantum phenomena.

Based on qubits – holding linear superposition of states.

1:1 0:1 1:0 0:0

• Linear superposition – Simultaneous studying of feasibility. 2 to power of n

• Entanglement and tunneling, physical solutions to mathematical problems.

• Idea is to output all results in one go.• Solutions for instant (de)cryptology.

Source:Youtube: ArtificialIntelligenceandMachineConciousnessresearch.googleblog.com/2016/06/ Exponentialfinance 2016

“Full harvest in one go”

Photo:PhilHendley,2006CreativeCommons,Flickr

Superforcasting is a systematic model to extract essential signals from information masses: based on intuition, probability and likelihoods of events.

• Foresight is a measurable skill that you can cultivate.

• We’re moving from predictive to prescriptive financial services.

• Self-learning forecasts will assist us in decision-making.

Superforecasters

PhilosophyCautiousNothing is certain.

HumbleReality is indefinitely complex.

Non-deterministicEvents are not meant to be.

Superforecasting - Style

Open-mindedTesthypothesis

openly

CuriousNeedforcognition

Self-criticalReflectivethinking

NumerateComfortablewith

numbers

ThinkingStyle

Source:HBR, USFinanceNews

Identify

Capture

AnalyzeCut95%

Calibration

What to look for? Essential to find weak signals.Identify -> Capture -> Analyze Signals favor or threat your business.

24/7enhancement

Methods can consist of one or many tools.

Superforecasting - Methods

SynthesizingBlend models with

your own

AnalyticalConsider adversary

views

PragmaticRational modelling Not fixed to agenda

Probability focusedLikelihood based, not

1 or 0

Thoughtful Accept fact change =

change of mind

IntuitiveEnjoy cognitive

challenges


Motivation, Grit + Ethics = Commitment to precision

Superforcasting - Focus

Passion drivenInternal flame

PersonalityI will get better

TenaciousAs long as it takes

Dedicated mindFocus

ImprovementInternal metrics

Growth mindsetConstant betterment


Precision

Germ.

Societies Cards Game changers

Game Changers

Tipping pointU.S. 45%

Australia 35%Germany 33%

CashlessSingapore 61%

Netherlands 60%Sweden 59%

InceptionIndonesia 15%

Greece 2%Peru 1%

8 million Indonesians own credit cards. Reuters May 29th 2016

Debit Cards Per Head

Credit Cards Per Head

3.28

1.75

1.48

1.25

0.94

China

Aus.

UK

Germ.US

2.9

1

0.880.33

0.06

US

Aus.

UK

China

Source:ECB,Reuters,JupiterResearch

Ind. 0.02Universal database protocolfor financial transactions.

Microloans for entrepreneurs in emerging countries.

Users are rated and graded by Facebook relationships.

Inclusion of wealth into GDP. Satisfied citizens, stability to society.

Cash inclusion

Community ratings

Real-Time microfinance

Blockchain

Cash Society

5B people live in cash society. Full impact of informal economy is not reflected in global GDP.

These people live in a daily economy, visibility is to sunset.

Inclusion to online economy evens inequality, reduces instabilityand increases the proportion of satisfied people in economy.

Access to goods and services

Wealth contributes to GDP

Increased overall stability in society

Source:TappCommerce

Cash vs. non Cash

non CashCash

52%48%

34%66%

9%

7%93%

2%98%

35%65%

North America

Western Europe Eastern Europe

Latin America

Asia (developed)

Asia-Pacific (emerging)

91%1%99%

Africa

Source:McKinsey&GapGemini

Game changers are people themselves.Cash inclusion, community based ratings, instant lending, lag-free cash transfers,

are disruptive finance - real-time and in global scale.

Technology assists us in decision-making, but we make the final pick.

Who Makes The Final Pick?

“Computers need to learn how to understand the world like a human.”Bart Selman, computer scientist, Cornell University

https://www.youtube.com/watch?v=6zpuHr7t8xI

“Thanks for Petteri for proofing.”

Thank you!From linear to exponential thinking

Accelerated Finance

Tapp CommerceSami Leino, Director of Business Development

accelerated finance and technology leadership

Economy & Finance