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Real Machine Summit: Nikolas Badminton traces AI revolution in finance

The Real Machine Summit, held October 22 at The Venetian in Las Vegas, brought together business leaders and some of the foremost minds in the study and application of artificial intelligence. The speakers at the conference, brought together by Feedzai and Money20/20, discussed the latest technological developments in machine learning and their wide-ranging impact for financial services providers.

The event featured a peek into the progress and challenges that lie ahead in the keynote address from artificial intelligence futurist, author and researcher Nikolas Badminton. He offered an overview of the history of AI, predicting massive changes on the horizon for banking and commerce. Attendees gained both a broad understanding of how machine intelligence reached its current state and forward-looking insights into the current movement of financial revolution.

Watch the keynote here:

 

 

The evolution of AI

Badminton traced the origins of artificial intelligence back to the dawn of research at a Dartmouth College conference in 1956. The ideas formulated then would not come to fruition until researchers weathered the AI winters of the 1970s and early ’80s, when funding was scarce. Advancements came gradually through steps like the development of Deep Blue, the AI that defeated chess champion Garry Kasparov.

screen-shot-2016-11-09-at-5-15-27-pmDespite these strides, the problem of Polyani’s Paradox, which states we know more than we can tell, persisted. It’s difficult to program a machine to perform tasks that rely on tacit knowledge. However, in 2015 Google DeepMind debuted a huge leap in this regard with the AlphaGo program, designed to play Go by drawing on machine learning in an artificial neural network.

Badminton described the major tech companies cooperating to push AI forward as “Big Brothers.” Thanks to players like Facebook, Google and Amazon, this technology has a daily impact on billions of users. Among those individuals are millennials, who represent a change in the customer base for financial institutions, more enthusiastic about new offerings from those Big Brothers than any from their own banks.

A time for disruption

As demographics change, people are no longer placing their faith in banks, and a financial revolution is underway. Badminton suggested viewing the economy as a fractal, an infinitely complex ecosystem involving considerations such as intercompany transactions, cryptocurrencies and cash-free countries. By drawing on some of the estimated 2.5 quintillion bytes of data generated every day for machine learning, artificial intelligence empowers fintech to engage with this increasingly elaborate financial landscape.

There is huge potential for finance and other industries in the expansion of technical capabilities. As a consequence, businesses centered on AI are undergoing a period of intense growth, with over $2.1 billion of investment to infrastructure startups and more than $6.9 billion to application startups since 2015. Badminton discussed some of the work currently being done with AI by these companies that could have meaningful implications for financial institutions.

AI makes possible the widespread use of bots and digital assistants and leads to improved efficiency and yields for lending. With conversational commerce, users can just ask a digital assistant or app for the goods or services they want. Machine learning also makes it possible for financial institutions and payment providers to detect questionable behavior and head off fraud.

AI still has its limitations, though: Badminton emphasized the importance of close cooperation between human fraud prevention teams and AI. Additionally, high-quality experiences are only possible when machines learn responses from a sizable user base. The use of machine intelligence in lending or advising raises questions about ethics and fairness, and technological transformation will certainly lead to jobs in the industry being lost or substantially changing.

The future of financial services

Badminton made five key predictions for how AI will continue to transform financial markets through 2020:

  1. Mobile devices everywhere will include integrated AI platforms.
  2. The workforces for financial services providers will undergo cuts as employees are replaced by data scientists and developers.
  3. Financial institutions will collaborate on determining the future course for banking and regulation.
  4. Market optimization and data sharing will bring stability to markets.
  5. The financial industry will face serious questions about policy, regulation and ethics in connection to AI.

Nikolas concluded by projecting farther down the line. He expects quantum computing and AI banking applications to bring a revolution in banking. In the next 20 years or so, he predicted, computing power will reach a tipping point that forces a worldwide re-evaluation of concepts like value and wealth and a burgeoning interest in promoting equality.

Learn more on how machine learning is already revolutionizing financial services and fraud prevention.