By 2040 most financial institutions may be run by robots.
Yesterday I entered on the web of my "digital" bank. I have €10,000 in my bank account. As I open the system it offers me an automatic credit. Guess for how much? €10,000!! And why do I need a €10,000 credit that I already have in the checking account? This
is what is called the Dumb Artificial Intelligence.
1. What is Artificial Intelligence? Why Google, Facebook, Apple, Amazon or Linkedin are investing in AI?
Suppose we want to find a unicorn photo on the internet. We will google it and it will look for the one that is called unicorn or that the related text appears the word unicorn. So far Google is a search engine, very agile but a mere search engine.
Now imagine that we are looking for a unicorn photo, Google shows us different photos and we click on the one we believe represents better a unicorn. At this time Google knows that this photo is most likely to be a unicorn. When thousands of people repeat
this process, Google is able by itself to "paint" a unicorn. At this moment Google goes from being a search engine to being a robot with Artificial Intelligence.
Google goes from knowing how to look for a unicorn to learning how to search and create a unicorn. It
goes from answering to questioning; huge different.
Every time we look for something on Google or Amazon we will be working to improve its AI.
2. What has changed so that the AI is now feasible?
The AI appears in research articles since 1955 but until now has had very little relevance in the common life. What makes us think that this can be its moment? Basically due to three new emergence technologies: Cheap parallel computation, Big Data Analysis
and improvement of algorithms.
3. Why is AI so useful for a bank?
Someday in the near future asking for loan, without any credit history, will be something like this:
I contact the bank chatbot while walking in the street. I raise my palm, use my skin and the screen recognizes me from my DNA, face, eyes and fingerprints. Although I do not have any credit history, I ask for a 10k loan to go on vacations. Instead of having
the “no” as usual answer, the robot has learnt that not having a credit history is not the same as not being good borrower. The robot studies in 2 seconds my contacts in several social media. If statistically I have an enough number of good payers contacts
that could mean that I am also a good payer. This is called Social Physics. You can judge a man by the company he keeps!
Most of the banking process are automated or can be learnt in a recursive way: loan lending, risk management, process control, asset management, trading, compliance, etc. When the robot learns enough of the financial system, he will be able to do almost
any process within the “Amazon Bank”. He will be the Chief Robot Officer.
The role of the CEO will rapidly be changing. To succeed from here on, CEOs will need to focus on analytics, disruptive technology or automation. I wonder if a CEO can overcome the best
Chief Robot Officer.
“The person who says it cannot be done should not interrupt the person who is doing it” Chinese proverb.