finance and artificial intelligence (real machine summit)
TRANSCRIPT
The Birth of A.I. Financial Revolution. 2017 to 2025.
The Birth of A.I.
The dreamerAl Jazari
The Book of Knowledge of
Ingenious Mechanical Devices
1. Ten water and candle clocks.
2. Ten vessels and figures suited for drinking sessions.
3. Ten pitchers and basins for phlebotomy and washing
before prayers.
4. Ten fountains that change their shape alternately, and
machines for the perpetual flute.
5. Five water raising machines.
6. Five miscellaneous devices.
http://history-computer.com/Dreamers/Arabic.html
1956
A.I. Winters
Pac-Man used a technique known as state machine (transitioning between states depending on conditions) to control whether or not a ghost ran towards
or away from a player.
1997
Polyani’s Paradox
“We can know more than we can tell…"
“AlphaGo figured out winning strategies for itself, both by example and from experience. The examples came from huge libraries of Go matches between top players amassed over the game’s 2,500-year history.”
http://www.nytimes.com/2016/03/16/opinion/where-computers-defeat-humans-and-where-they-cant.html
Big Brothers
• Facebook - 1.7bn users • Google - Gmail now has more than 1 billion monthly active
users • Amazon - 244m user accounts • Microsoft and IBM enables millions of businesses that have
the ability to connect with billions of users across multiple
sectors.
And, the customer has changed.
Source:www.millennialdisruptionindex.com/wp-content/uploads/2014/02/MDI_Final.pdf
“73% of Millennials would be more excited about a new offering from Google, Apple, Amazon, PayPal, or Square than from their own nationwide bank.”
Millennial Disruption Index
FinancialRevolution
The Fractal Economy
Source: https://aeon.co/ideas/the-economy-is-more-a-messy-fractal-living-thing-than-a-machine
“But why not look at the economy in terms of the messy complexity of natural systems, such as the fractal growth of living organisms or the frantic jive of atoms?”
AEON
“Every day we create more than 2.5 quintillion, that’s 10 to the power of 18, bytes of data. That’s so much data that 90% of the world’s data today has been created in the last two years alone.”
4m+ large scale datawarehouses
every year.
http://blog.tracxn.com/2016/02/04/tracxn-report-artificial-intelligence/
Over $2.1B has been invested in AI-Infrastructure startups since 2010 with $1.3B being invested in 2015. AI – Application startups have seen the larger share of the investments, with over $6.9B being
invested in AI-Applications startups since 2010, with 2015 seeing a total raise of $3.6B.
Increasing data volumes Changing demographics
Regulatory tensions Efficiency
Changing technical landscape
Source: https://www.cbinsights.com/blog/artificial-intelligence-fintech-market-map-company-list/
Bots
Source: http://uk.businessinsider.com/virtual-assistants-siri-alexa-growth-chart-2016-8?r=US&IR=T
HAL Paradox“When user base and adoption is low,
the A.I. experience will not be what you expect…”
Luvo
"Although Luvo initially needs to be trained to understand subjects, RBS insists it will earn its AI stripes by "learning from its mistakes," which will make it "more accurate over time."
http://www.engadget.com/2016/03/04/rbs-luvo-ai-chat-bot/
Meet Amelia
Conversational Commerce & Payments
VIV5m5s
6m59s - 8m13s
https://www.washingtonpost.com/news/the-switch/wp/2016/05/04/siris-creators-say-theyve-made-something-better-that-will-take-care-of-everything-for-you/
X
Moving money across borders using path-finding algorithms
Source: http://fortune.com/2016/07/10/wall-street-blockchain-technology-banking/
Lending
Source: https://www.underwrite.ai/
&
“By exploiting underwriting inefficiencies in the pricing models of these exchanges we discovered that we could significantly outperform the anticipated yields at all asset classes.”
Source: http://www.britishscienceassociation.org/news/rise-of-artificial-intelligence-is-a-threat-to-humanity
“The fund closed out 2015 with a net annualized yield of 18.55% on Lending Club assets and are trending at a 20% annualized return for 2016.”
Source: http://www.britishscienceassociation.org/news/rise-of-artificial-intelligence-is-a-threat-to-humanity
But, what about fairness & bias?
“Unless they're auditing their algorithms for fairness and showing me those audits, why shouldn't we expect something to be going wrong?"
Cathy O'Neil, Weapons of Math Destruction
Source: http://www.americanbanker.com/news/bank-technology/can-ai-be-programmed-to-make-fair-lending-decisions-1091624-1.html
Robo-Advisors
Never tires. Bigger data set to review. Cheaper investments. Increased trust and removal of bias.
Pros
Not giving ‘personal advice’. Only as good as the data and techniques used for learning. Lack of ownership of knowledge around investments. Trust.
Cons
Investment Banking
“It’s Siri for Wall Street.
The AI software uses big data to analyze new events, answer traders’ questions, and spit out reports predicting where markets are headed.”
FORTUNESource: http://fortune.com/2016/10/18/ally-pennies-1000/
Fraud
PayPal generates $10,900 in payments every second, and it handled 4.9 billion
payments in 2015 for 188 million customers in 202 countries.
“To detect suspicious activity, and more importantly to separate false alarms from true fraud, PayPal uses a homegrown artificial intelligence engine built with open-source tools.
The effort has forged a bond between its human fraud analysts and its AI program.”
American Banker
Source: http://www.americanbanker.com/news/bank-technology/how-paypal-is-taking-a-chance-on-ai-to-fight-fraud-1091068-1.html
Significantly reduce friction associated with risky transactions and protect users against cyberthreats such as account takeovers, Man-in-the-Browser (MitB) malware and remote access (RAT) attacks.
What about jobs in finance?
“60% think that the use of robots or programmes equipped with artificial intelligence (AI) will lead to fewer jobs within ten years.”
British Science Association
Source: http://www.britishscienceassociation.org/news/rise-of-artificial-intelligence-is-a-threat-to-humanity
1764
Community Engagement & Culture A.I. Training Specialists
System Ethicists Data Scientists & Supervisors
Developers
What about accountability?
“If you’ve got a computer that can play Go, a pretty complicated game with a lot of variations, then developing an algorithm that lets you maximize profits on the New York Stock Exchange is probably within sight.”
President Barack Obama talking to WIRED
“And, if one person or organization got there first, they could bring down the stock market pretty quickly, or at least they could raise questions about the integrity of the financial markets.”
President Barack Obama talking to WIRED
“Safe interruptibility can be useful to take control of a robot that is misbehaving and may lead to irreversible consequences.
If such an agent is operating in real-time under human supervision, now and then it may be necessary for a human operator to press the big red button to prevent the agent from continuing a harmful sequence of actions.”
Nick Bostrom
But, how can we do this with such a complex ecosystem like the
financial markets?
2017 to 2020
1A.I. becomes ubiquitous through powerful mobile devices with integrated A.I. platforms at the hardware level.
2Reduced financial services workforce with Developers, Data Scientists, Ethicists, & A.I. Trainers stepping up into more critical functions.
3Old and new financial industry players come together to lay out a roadmap, and regulatory principles, for the future of banking.
4Data sharing and overall market optimization leads to economic stability. This'll be a product of the integrity the systems being questioned.
5Ethics, regulation and policy decisions relating to A.I. usage will become critical tasks in the financial industry.
But, what about the
future future?
‘Quantum supremacy’ and marketwise quantum A.I. banking applications revolutionize the management of central banking and financial applications.
The long-term effects of A.I. and advances in computing power (approx. 20+ years) will mean a wholesale redefinition of wealth, monetary usage, value, and a focus on equality across societies in the world.
