As I’ve written many times (e.g., here), it is difficult to overestimate the impact of artificial intelligence (AI) on the financial services industry. As Wired magazine said, "it is no surprise that AI tops the list of potentially disruptive technologies”. With Forrester further forecasting that a quarter of financial sector jobs will be “impacted” by AI before 2020, there’s an urgent need to develop strategies in this. It is because the need is so urgent that I was delighted to be asked to give a keynote at the Digital Jersey AI Retreat in September. (Which began with a beach barbecue, something I recommend to conference producers everywhere.)
A beach barbecue is always a good idea at a conference.
On the first day of the event, political economist Will Hutton emphasised that financial services will be at the “cutting edge” of the big data revolution, pointing out that not only does the sector hold highly personal, highly valuable data about individuals, but that it has more complex oversight requirements than most other sectors.
Will Hutton addressed the audience by video link
The point about oversight was central to my keynote. In “Radical Technologies”, Adam Greenfield wrote of the advance of automation that many of us (me included, by the way) cling to the hope that “there are some creative tasks that computers will simply never be able to peform”. I have no evidence that financial services regulation will be on of those tasks, so in my talk I suggested AI will be the most important “regtech” of all and made a few suggestions as to how regulators can plan to use the technology to create a better (that is faster, cheaper and more transparent) financial services sector. The strategic core of my suggestion was that jurisdictional competition to create a more cost-effective financial services market might be a competition that Jersey could do well in.
Regulation, however, was only one the topics discussed in a fascinating couple of days of talks, discussions and case studies. The surprise for me was that there was a lot of discussion about ethics, and how to incorporate ethics into the decision-making processes of AI systems so that they can be audible and accountable. I hadn’t spent too much time thinking about this before, but I was certainly left with the impression that this might be one of the more difficult problems to address and talking with very well-informed experts. Although I must say that the most surprising discussion of the event that I was personally involved in took a very different tack: whether AIs employed in the service of financial institutions should come under the HR department or the IT department!
I fly away from the event secure in my conviction that AI is an event horizon for the financial services industry. With our current knowledge, we simply cannot see (or perhaps even imagine) the other side of the introduction of true AI into our business. But we can see that our traditional “laws” of cost-benefit analysis, compliance and competition will not hold in that new financial services space, which is why it is important to start thinking about what the new “laws” might be and how the financial services can take advantage of them.
[An edited version of this post first appeared on LinkedIn for Digital Jersey, September 2017]
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