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Big Banks Will Fall First To AI, China's Most Famous VC Predicts (qz.com)
An anonymous reader writes: Wall Street will be one of the first and largest industries to be automated by artificial intelligence, predicts Kai-Fu Lee, China's most famous venture capitalist and former Microsoft and Google executive. Lenders, money managers, and analysts -- any jobs that involve crunching numbers to estimate a return -- are at risk. "Banks have the curse of the baggage they have, like Kodak letting go of film," Lee says. "Their DNA is all wrong." [...] The big banks that dominate now, the venture capitalist predicts they will be outmaneuvered by smaller startups able to deploy new technology much faster.
The viet cong are using AI?
Since all the current programmers that maintain the massive number of COBOL systems that banks currently use are retiring, it's the perfect time to replace them with AI programmers.
"I don't worry about the return on my investment. I worry about the return *of* my investment."
That's something to keep in mind with the coming wave of new-fangled financial services outfits, starting with Capital One, which is apparently Google-like in its determination to collect and harvest every ounce of data about how their customers spend their time and money. Slow-moving and a bit set in their ways can be a good thing.
What? You think the big banks are going to go away if they're ever run by AI?
It'll just be Skynet with financial control instead of nukes - pretty much like we have already with our overweening government.
Part of the housing bubble was due to AI with automatic underwriting and property valuation. Back in the stone age banks had people visit homes to determine their condition and value compared to local sales. By 2006 we had AI doing the estimates to squeeze every cent of profit from the transaction. Same with underwriting. A lot of the loans had the final decision made by computer instead of an underwriter.
Congress will have to pass laws somehow allowing people to sue machines when mistakes happen. Will the AI be able to represent themselves in court? AI; pro se. Will the AI approve their attorney's fees?
Actually that could happen, but it won't because banks lobby the hell out of the governments to protect them against every and any competition (see the brazilian Nubank https://techcrunch.com/2016/12... )
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Who is this Al guy, and why does he hate banks? Can we change his mind?
You get higher returns with a credit union and the fees are lower and they have debit cards and credit cards and cheaper loans too.
Just saying.
-- Tigger warning: This post may contain tiggers! --
Banks do not have to be have perfect records of make smart choices with loans, they just need to come out with a positive margin of profit. I could foresee applying for a loan online, filling out a bunch of forms and then waiting for the server to approve or deny a loan. As they get more profit this model could easily expand to serve people in more locations until they are global. Bankers aren't magic, they are just analyze data.
Anons need not reply. Questions end with a question mark.
Bankers take such high salaries, the AI could do better if 10% of decisions were total mistakes.
Why? The banks will just buy out any competition.
That's what I think this guy is trying to do. After all, he's got skin in the game, stet?
Time for crooks n' spooks around the world to stop looking for boring elementary software design or coding flaws, and turn their focus on the higher-learning discipline of how to influence AI systems to do one’s bidding.
If the past two decades have taught me anything, it's that our financial markets don't follow the math. If you look at the housing bubble, it should have been horrific but we had bailouts. Same story for big auto.
AI may be good at finding novel patterns faster than any analyst but no AI is smart enough to determine the course our lawmakers will take when markets fail to move in direction we want them to go.
Oh, so the banks will still exist, they will just have a lot fewer employees. So even less possibility of whistle-blowers, oh yeah, banks are gonna disappear any time now.
You can replace all those bloated wall street assholes with a small script.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
"[...] will be outmaneuvered by smaller startups able to deploy new technology much faster."
Goldman Sachs appointees to the whitehouse for the last few administrations, and you think small startups will ever be allowed to breath air and take their first baby-steps without being instantly crushed? Regulatory Capture.
Otherwise how would I have known that institutions that effectively just shuffle numbers around would likely be automated by systems designed to shuffle numbers.
Predicting which industry is affected by automation is like predicting which wave is going to crash first. In the end it doesn't matter, they all get you wet and there is no dry land.
"Never get into a word fight with someone who buys ink by the barrel"... I might be paraphrasing, but it's from "Mr. Smith Goes To Washington". Well, never get into an economic fight with those who control how the money is printed. They have the power to restructure the social system so that less and less money goes into efforts to obviate them. Spreadsheets could have replaced most big banks and financial advisers a long time ago. All they had to do was create a diversionary tactic to scatter the attention of those who would do that, but do it without working for them. Before making predictions who will survive and who will not, it's useful to realize that the struggle to survive is a war and then learn how wars are fought. FUD is nothing compared to full-force assault. Most of anti-bank messaging is sponsored by banks. Most of anti-muslim sentiment is sponsored by majority-muslim countries. The list goes on. Why? To control the message. If AI will run finance, then AI will become the banks' method -- not their downfall. Remember... it's war... which means splitting enemy forces into adversarial entities and then carefully crafting alliances; all the while sabotaging those who stand against you by convincing them to adapt less-than-perfect strategies in the long run and self-destructive tactics in the short run.
Any guest worker system is indistinguishable from indentured servitude.
...wouldn't they be called Venture Communists?
Banks already invest billions in stock trading algorithms. You think they aren't already investing in loan-approval AI? Venture capital AI? Repossession value AI? They will deploy these decision making algorithms first as tools for the bankers, then in place of the bankers. And with the wealth of data they have in their own systems they will be better able to train these AI than some startup.
Deep learning NN require shit-tons of training data or they are not robust and fail in weird ways. The incumbant banks have that data, and they sure-as-hell are not selling it to some startup so they can learn to out-compete them.
This article is wishful thinking.
"I will trust Google to 'do no evil' until the founders no longer run it." Hello Alphabet.
For what they propose to happen, trading AI will need to understand it fights other AI. Understanding their mindsets means understanding self mindset. Will that lead to self-conscious AI?
That when Ai becomes sentient... we will all get our jobs back. :P
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The insurance industry is ready to get F'd in the A regarding big data. I want to be in on that F.
Banks are over regulated middlemen who take money on loan from the fed at zero interest and lend it out at 4%. That's the entire business model. Every aspect of what they do is overseen by regulators at OCC or the Federal Reserve depending on the type of banking entity. These are called "supervisory regulators" as opposed to "enforcement regulators" like the SEC and CFPB who only come in when a rule is broken. A bank can not take a fart with a supervisory regulator approving the release or more accurately "the rule governing the release process." While US banks are not state owned banks they are so state controlled by their supervisory regulators that the distinction is without difference. For their trouble they can collect various fees and rents on money that is not theirs but for entities with many trillions nominally under management the returns are actually quite paltry as a % of the total they manage. What you have seen in banking is tremendous consolidation. Regional and local banks are all dead or dying. The supervisory regulations are too complicated and expensive to implement. Rule W alone is enough to make your head spin. We are already at the point where BoA, JPMorgan, Wells, Citi and Goldman are basically are the only banks that matter in the US and Goldman has just in the last few years entered the personal banking space and is barely relevant there. Citi will likely merge with and into one of the other in the next decade and the regionals will continue to consolidate to the point where there will probably be half as many as there are now in 10 years.