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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.
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.
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.
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.
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.
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.
I thought the Viet Cong were all named Charlie, not Al.
"[...] 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.
"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.
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.
Actually AI is already used extensively in the Investment Banking Sector. In this instance a megalomaniac AI System hell bent on exterminating the human race might actually be marginally preferable to the current banking regime as at least the AI System wont be screwing us over for a percentage
Build a Man a Fire, and He'll Be Warm for a Day. Set a Man on Fire, and He'll Be Warm for the Rest of His Life.