Ai In Banking Hype Or Revolu on

Several years ago, the CEO of Deutschebank stated in an interview that he thought AI would replace up to half of its staff . The predic on sent shockwaves through the industry and made a lot of employees feel uncomfortable about the longevity of their roles. The bank soon fi red him and replaced him with somebody else, so he won’t be responsible for the organiza on’s sweeping changes. But it did reveal just how much hype there is in fi nancial circles about the promise of AI. Other people have joined the fray, calling for the end many rou ne jobs in the banking industry. Ci group execu ves believe they will say goodbye to around a third of workers. Japanese fi nancial group Mizuho says that it is looking to replace more than 19,000 by the end of the present decade. But whether the digital transforma on in banking will bear fruit remains to be seen. Currently, there’s a problem right at the core of AI research. The people at the forefront of the movement know that the technology is very good when it has an objec ve func on - something to op mize - but it isn’t so good in other situa ons. So, for example, it can maximize the probability that an image shows a cat. S ll, it can’t engage very well in regular conversa on - the sort of thing you need for healthy client rela onships. Artificial intelligence is also a long way from becoming what you might call “general intelligence.” The so ware is good at performing cogni ve tasks, but it has no subjec ve experience of them. It doesn’t know what it is doing - it just goes through the mo ons. This fact of the ma er means that some of the more outlandish predic ons probably won’t come true. What we seem to be looking at is something that will allow so ware to perform a subset of cognitive tasks. However, it is doubtful we will see programs with subjective agency any time soon. When you tell them what to do, they’ll do it well. But they won’t be running their own companies just yet. That’s very futuris c. AI, however, is a wishy-washy concept. Unlike the tech revolu ons of the last decade - like the cloud - you can’t easily pin it down. AI doesn’t just do one thing - it is a solu on for a whole bunch of tasks. The banking sector, therefore, is going to have to figure out how to deploy it sensibly. For now, it won’t replace people. Instead, it’ll be more like a tool that makes them more valuable. It is, in a sense, a form of cogni ve assistance, just like machines are assistance for manual labor. Robots can’t do all the work themselves, but they can dramatically increase the output per worker. The same may now be coming to the banking industry. You’ll s ll need offi cers to process business banking customers manually, but AI could speed up aspects of the process, like credit checking. The banking sector needs to be careful not to set unrealis c expecta ons of AI. The people at the forefront of the fi eld are more than willing to point out that the science isn’t done yet. They can replicate some aspects of intelligence, but they can’t fabricate it wholesale. Researchers s ll need to make fundamental breakthroughs to usher in that exci ng and giddy new world. To call AI in banking pure hype, though, is taking it too far. There are n umerous examples of AI in banking already, and the technology only con nues to improve.

Biometrics For Added Security

We fi rst saw biometrics in banking in the fi lm Blade Runner. But advances in technology and AI have made it to make it a reality. And it’s already been done. Bri sh bank Natwest, for instance, now allows customers to open accounts with a selfi e. It then stores their data securely, linking their biological profi le to their fi nancial informa on. The security benefi ts of AI could be quite extraordinary. It might sound unsafe, but it is actually a massive improvement over the current system of using government-mandated IDs like passports and driving licenses. Biometric forms of iden fi ca on are much more challenging to forge and, generally, safer than their paperbacked rivals.

Investment Trading

Currently, bankers rely on seasoned traders’ quick wits to make investment decisions in the equity markets on behalf of their clients. Movements, however, are often so fast-paced and unpredictable, that many traders struggle to equal the market, let alone beat it.

Banks and other financial institutions, therefore, are wondering whether there is a way to use the data-crunching abili es of AI to make be er split-second decisions. Ar fi cial intelligence could theore cally evaluate fi rms based on publicly available data, establish fair value, and then conduct trades based on those insights. By using data be er than any human could, it might be be er at determining value - at least in the short-term.

Fraud Protec on

Banking fraud is currently a massive issue for the banking sector. Every day, thousands of people lose money from their accounts because of fraudsters usually opera ng over the internet. AI tech, however, off ers a poten al solu on. Because AI can connect the dots between vast troves of customer informa on, it can o en spot poten ally fraudulent ac vity quickly. Fraudsters trying to access accounts from an unknown IP or loca on, for instance, could trigger a denial of service. Similarly, if an AI suddenly detects unusual account activity (consistent with fraud), it can put a block on it, protec ng money un l the owner confi rms that it made the transac ons.

Be er KYD Checks

The Patriot Act introduced a bunch of new security requirements for online transactions. But ensuring that all these are being met is diffi cult, even for experienced banking professionals. The idea now is to use AI to check a range of data, from a customer’s social security to their social media, to determine whether fraud or money laundering is taking place. The technology should reduce the amount of me that it takes to assess an applicant. And that might bring banking fees down and make the process more effi cient.

The Covid Virus is Stimulating the Evolution of Business

By Michael Marshall, PhD

It seems obvious to most people that business of all types, are changing, adap ng and evolving in response to the Covid Virus and its’ eff ects on business. Observing this is continual daily everywhere. Discussing this with business owners, management, staff and employees of all types of business and companies, confi rm that business management, attitudes, operations, strategies, human resources, communications and marketing, revenue generating parts of the business is changing quickly and evolving. Restaurants are now focusing more on the ‘take-out’, ‘pick-up’ and catering side of the business. Enhancements and changes for more sanita on of the restaurants, employees, food prepara on and food packaging for ‘take out’/’pickup’ are all advancing and evolving. Social distancing and wearing masks are now part of daily life and work. Some cultures are struggling with this since they are not used to this. USA is struggling with this with 35-45% seeming to object to this. Retail stores having same issues with customers and evolving as well with these things. Stores are controlling and managing this but this is a challenge. The stores are now focusing more with their online websites and selling online with home delivery. Inventory levels are declining in the stores forcing customers to shop online via the internet. There is an increase demand for home delivery services and logis cs. This is crea ng new jobs. Clothing stores have declining sales because many people are working out of their house now and do not need to buy so much offi ce business clothing. Auto sales are declining since people are not driving as much so they do not need new autos as much and same for auto repairs and new res sales. Computer sales are increasing, and auto sales and auto repairs are declining since many people are now working out of their homes instead of driving into the offi ce and workplace through traffi c daily. There is an increase in unemployment in some jobs and business sectors and an increase in others especially logis cs, warehousing, truck drivers and home delivery drivers. Some businesses cannot stay in business with the Covid Virus situa on. Restaurant Buff ets where food is put out on tables in the open, for all that you can eat and serve yourself, is not able to meet the sanita on and social distancing requirements and needs. These businesses are closing or changing to provide only ‘take out’, ‘carry out’, ‘catering’.

The air quality is increasing and getting better because of less people driving to work every day. Less travel and less autos on the road mean a decrease in gas demand so gas prices are decreasing. Companies are now having many of their office staff and management work from their own house remotely. This is a major a tude change, management change and operations change. Video conferencing being u lized far more now instead of traveling to customers and mee ng in an offi ce. Companies are fi nding that they are actually more productive with this and there are substantial cost savings with not having to support company offices. They can now utilize the space for other things that can help the business to grow. Companies also are fi nding that many highly talented people who previously they could not hire due to reloca on was not acceptable or desirable, now can a ract more of these highly talented people since they can work remotely. When in person mee ngs are needed and required , video conferencing technology is u lized or such meetings are held to a minimum and staff travel by airplane to a major airport selected as the central point to meet, and local business conference and mee ng rooms are rented for the day for such. The airlines business has decreased signifi cantly with some es mate being 50-60% decrease because business travel has decreased so much as well as personal travel decreasing. For social distancing airlines cannot pack people into the airplanes, elbow to elbow so close anymore. More people are staying home to entertain or entertaining outside of house on the lawn or grass. This is causing a big demand on lawn chairs to sit on outside. Since there are more people working from their home now, there is a big demand for home improvement products to repair the house or update and remodel. In the USA, house building products and wood lumber is in such high demand that prices have increased signifi cantly causing new housing and new buildings cost to increase. Home furniture and home décor stores are busy with sales increasing since people are at home more and see the need for such. There is a high demand for higher level air quality equipment for all businesses and companies. Cleaning supplies and sanitation supplies for higher level sanitation requirements are in high demand. Personal hygiene protec on products such as masks and medical gowns are in high demand. With company factories, they are reorganizing the facili es to provide more social distancing. Some companies, businesses, products and services are increasing sales while others declining. Due to the Covid Virus students from many schools, grade schools, elementary schools levels are now learning from home online with a computer and teachers are learning how to do this. A lot of new computers are being sold with the increase of demand and need. Parents are learning how to help their children to learn and how to help mo vate them as well. This is a very big challenge for the parents and the students. Same for college and universities. Online classes are taking the place of classrooms and teachers are learning how to teach online and students are learning how to learn online and mo vate themselves. It is so important and cri cal for businesses and companies to crea vely adjust and make bold changes and improvements for ‘growing the business’ and ‘staying profi table in business’ with the current Covid Virus situa on and challenges. Even now, many businesses and companies are re-evalua ng their products, services and their capabili es to expand their products and services into things in high demand. All businesses need to be doing the same thing. This is progressively helping these businesses and companies to grow signifi cantly, both in sales and profi ts. There are a lot more changes with businesses and consumers happening right now and I have only men oned just a few in this ar cle to help open up your eyes to it, to help you be more aware and thinking about it more. Once you are more aware of this, you will automa cally and naturally start seeing it more. This may even take over much of your thinking and observing. Businesses are evolving and changing due to the Covid Virus. Consumer behaviors, needs and a tudes are changing and evolving. There will be a lot more changes to come and all will evolve. Many of the business changes will most likely progress even though the Covid Virus will eventually get managed be er and have inocula ons / vaccina ons for it. Do not expect all of the business changes to go back to the way things were before Covid.

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