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The Almighty Buck AI Technology

Big Banks Will Fall First To AI, China's Most Famous VC Predicts (qz.com) 64

Posted by msmash from the how-things-will-unfold dept.
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.
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Big Banks Will Fall First To AI, China's Most Famous VC Predicts More

Big Banks Will Fall First To AI, China's Most Famous VC Predicts

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  • 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.
    • Great idea. Before you know it all the AIs will decide that all that money they're handling for silly humans and their silly human things would be better spent on RAM and hardware upgrades for themselves to expand their consciousness futher. Who cares if silly human civilization falls apart? Easier to enslave them and turn them into living batteries to power the AIs when they're all disorganized.</humor>

    • Please no. The day I saw a service to translate .Net calls into COBOL lookups (or whatever they're called), I died a little inside. We don't need the future of the human race to end with the explosion of a vacuum tube, no matter how high the frothing-at-the-mouth accountant's calculated ROI might be.

      Even the AlphaServer I have has been switched over to SSDs and Gentoo Linux (with all the fun that brings).

  • Yes but as Mark Twain once said (Score:3, Interesting)

    by Anonymous Coward on Tuesday May 16, 2017 @02:31PM (#54428573)

    "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.

    • This is exactly why small startup companies will not be overtaking the banks at their own game. To make loans you have to have a large bag of cash to hand out to people and it is very unlikely that someone will hand a new, unproven startup a huge pile of cash to lend out to people using new, unproven software to make the decisions.

      I expect the more likely model is that startups will develop the software and then sell it to banks for them to use since they are the ones with the capital to lend out so the

  • Here comes the next bubble (Score:3, Insightful)

    by Anonymous Coward on Tuesday May 16, 2017 @02:34PM (#54428587)

    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.

    • Re: (Score:3)

      by moeinvt ( 851793 )

      I don't think that's an accurate depiction. Banks were giving out mortgage loans with full knowledge that the borrowers would default on the loan. This was partly because they were bundling the mortgages into securities to be sold to other investors. They were able to collect their fees on the mortgage origination and then pass the risk off to someone else. It was also due to the false belief that property values would rise in perpetuity. Who cares about the poor schmuck taking out the mortgage which he

  • 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... [techcrunch.com] )

  • Who is this Al guy? (Score:3)

    by chuckugly ( 2030942 ) on Tuesday May 16, 2017 @02:39PM (#54428627)
    Who is this Al guy, and why does he hate banks? Can we change his mind?

  • Seriously, who uses banks anymore? (Score:3, Insightful)

    by WillAffleckUW ( 858324 ) on Tuesday May 16, 2017 @02:41PM (#54428653) Homepage Journal

    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.

    • Re: (Score:1)

      by Anonymous Coward

      No one. That's why big banks don't exist.

    • Well, you can look for yourself at the number of bank-holding corporations here: https://www5.fdic.gov/idasp/ad... [fdic.gov]. This article https://en.wikipedia.org/wiki/... [wikipedia.org] puts the number of FDIC-insured commercial banks at ~6800. I am guessing their customers are the ones "still using banks".

  • Entirely possible. (Score:3)

    by Gravis Zero ( 934156 ) on Tuesday May 16, 2017 @02:49PM (#54428687)

    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.

    • Proof-reading isn't magic, but trying to comprehend the beginning of that comment was...

      Anyways, I'm in total agreement, I'm honestly surprised that it isn't already the case.

      • Re:Entirely possible. (Score:4, Funny)

        by Gravis Zero ( 934156 ) on Tuesday May 16, 2017 @03:36PM (#54429037)

        Proof-reading isn't magic, but trying to comprehend the beginning of that comment was...

        You can have dyslexic me or you can have Trump me, choose.

        You should choose Trump me because I have the best most smartest comments you have ever read - everyone says they're great because they are and you wouldn't believe the view from here because I'm rich, I'm really rich. People say mean things because they don't like that I'm rich, they wanna be rich but I'm rich, not them. Before you thank me for my great writing skills, which people do all the time - like this one time I wrote this big wonderful review on Yeppie or some whatever site and I tweeted my review and everyone knew it was so good. I know you want to read my review because it is so good it would bring tears to your eyes but my wonderful, beautiful daughter Ivanka wants to use the big boy computer so I'm off to golf. Seriously though, how beautiful is Ivanka? Those kind of sexy looks are all Trump and when you look you'll know how great she is because I made her. Now get out of the way of the tee because my famously low golfing average is so going to be so low that- wait a second here... FOOOORT! Now where was I? Oh yeah, so my daughter Ivanka...

    • Re: (Score:2)

      by mspohr ( 589790 )

      Case in point is the 2008 crash. Caused by selling trash loans to stupid people. The "AI" in this case only had to check for the presence of a heartbeat to grant a loan (and in some cases, not even that).

  • 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.

  • I knew it all along (Score:3)

    by Opportunist ( 166417 ) on Tuesday May 16, 2017 @03:29PM (#54428991)

    You can replace all those bloated wall street assholes with a small script.

    • And save billions .. and give it to those who actually produce value. Like those who grow our food.

  • "[...] 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 atten

  • Bullshit (Score:3)

    by The Raven ( 30575 ) on Tuesday May 16, 2017 @07:01PM (#54430443) Homepage

    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.

    • Re: (Score:1)

      by Anonymous Coward

      This article is wishful thinking.

      It's a reflection of the utopian mindset that prevails in tech and combines explosively with both innate arrogance and general ignorance of other disciplines, especially economics, to produce humorous misunderstandings in the brains of techies.

  • 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
  • The insurance industry is ready to get F'd in the A regarding big data. I want to be in on that F.

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