Worldwide, the annual value of securities transactions is nearing US$2 Quadrillion, (DTCC). Financial services, already in the top 5 in digital transformation and technology adoption, is moving rapidly to embrace the 5th Machine Age Unlimited X-Revolution.
What is the 5th Machine Age Unlimited X-Revolution?
The “5th Machine Age” term refers to the rapid integration of artificial intelligence (AI) across all industries and particularly through an area of AI called machine learning (ML).
This is accentuated by the ACM (No.1 in computing science) in March announcing their A.M. Turing Award Winners and deep learning pioneers Geoffrey Hinton, Yoshua Bengio and Yann LeCun. The Turing Award is the highest honor in computing science and is considered the Nobel Prize of computing. "Deep neural networks are responsible for some of the greatest advances in modern computer science, helping make substantial progress on long-standing problems in computer vision, speech recognition, and natural language understanding,” noted Jeff Dean, Google Senior Fellow and SVP, Google AI. “At the heart of this progress are fundamental techniques developed starting more than 30 years ago by this year's Turing Award winners Hinton, Bengio and LeCun. By dramatically improving the ability of computers to make sense of the world, deep neural networks are changing not just the field of computing, but nearly every field of science and human endeavor."
In traditional computing, a computer program directs the computer with explicit step-by-step instructions. In deep learning, a subfield of AI research, the computer is not explicitly told how to solve a particular task such as object classification. Instead, it uses a learning algorithm to extract patterns in the data that relate the input data, such as the pixels of an image, to the desired output such as the label “cat.” The challenge for researchers has been to develop effective learning algorithms that can modify the weights on the connections in an artificial neural network so that these weights capture the relevant patterns in the data.
Geoffrey Hinton, who has been advocating for a machine learning approach to artificial intelligence since the early 1980s, looked to how the human brain functions to suggest ways in which machine learning systems might be developed. Inspired by the brain, he and others proposed “artificial neural networks” as a cornerstone of their machine learning investigations.
In computer science, the term “neural networks” refers to systems composed of layers of relatively simple computing elements called “neurons” that are simulated in a computer. These “neurons,” which only loosely resemble the neurons in the human brain, influence one another via weighted connections. By changing the weights on the connections, it is possible to change the computation performed by the neural network. Hinton, Bengio and LeCun recognized the importance of building deep networks using many layers—hence the term “deep learning.”
The conceptual foundations and engineering advances laid by Hinton, Bengio and LeCun over a 30-year period were significantly advanced by the prevalence of powerful graphics processing unit (GPU) computers, as well as access to massive datasets. In recent years, these and other factors led to leap-frog advances in technologies such as computer vision, speech recognition and machine translation.
Hinton, Bengio and LeCun have worked together and independently. For example, LeCun performed postdoctoral work under Hinton’s supervision, and LeCun and Bengio worked together at Bell Labs beginning in the early 1990s. Even while not working together, there has been a synergy and interconnectedness in their work, and they have greatly influenced each other.
Hinton, Bengio and LeCun continue to explore the intersection of machine learning with neuroscience and cognitive science, most notably through their joint participation in the Learning in Machines and Brains program, an initiative of CIFAR, formerly known as the Canadian Institute for Advanced Research.
What is the “Unlimited X-Revolution”?
The “Unlimited X-Revolution” term is used to acknowledge the United Nations “Generation Unlimited” coming after millennials. With this generation the norm is “A Triple C”: hyper automation, time compression in days and weeks in new innovations, massive convergence in physical / biological / digital realities, accelerated and ubiquitous connectivity powered by unbounded computational capabilities. The “X” signifies the unintended consequences both positive and negative due to A Triple C.
Financial Services and Fintech Ideas Festival
At the forefront of this revolution is financial services. This was clear last week, March 27-28, at the seminal and most influential financial services summit for CEOs, Fintech Ideas Festival.
The FinTech Ideas Festival had over 200 invited elite attendees...it was an exclusive, invitation-only event for the CEOs and senior leaders of the nation's leading banks and FinTech firms, as well as leaders in venture capital and private equity. The Fintech Ideas Festival (FIF) lineup featured more than 40 CEOs and leading innovators who discussed the future of everything from payments to digital identities, financial health, privacy and data, cybersecurity and balancing innovation and regulation.
Examining the themes more closely provides a very good picture of what should be top of mind for many industries.
Topic areas at FIF included: AI/Machine Learning, Blockchain, Cybersecurity, Customer Experience, and the Future of Financial Services.
Deep dive private Salon sessions with interactive exchanges covered six areas:
1. Customer Experience: Your future customers – What do they want and how will you provide it?
2. The Future of Financial Services: Financial institutions of tomorrow – Will incumbents survive?
3. Blockchain: There’s a Blockchain for That – A new era of payments, trading, and identity management?
4. AI/Machine Learning: Automated decision making – How far should we let machines go in making decisions for us?
5. Cybersecurity: Hackers, hackers everywhere – What the future of Quantum, Cognitive and 5G means for your cyber defenses.
6. Privacy and Data: What happens when customers want their privacy back?
How does this match with industry trends? From the WEF Future of Jobs Report, by 2022, adoption forecasts include:
86% big data, 73% machine learning (a form of AI), 73% Blockchain, 65% IoT, 59% AR/VR, 54% encryption, 49% wearable technologies, 43% quantum computing, 35% humanoid robots, 32% non-humanoid land robots, 27% stationary robots, and 16% autonomous transport.
More on the Bank Policy Institute (BPI) and Two Senior Leaders
The Bank Policy Institute (BPI) hosted the Fintech Ideas Festival and it helps to learn more about them. BPI is a nonpartisan public policy, research and advocacy group, representing the nation's leading banks in the US, employing nearly 2 million Americans, and making 72% of all loans. BPI also serves their members through their Business-Innovation-Technology-Security division (better known as BITS), which provides an executive-level forum to discuss and promote current and emerging technology, foster innovation, reduce fraud and improve cybersecurity and risk management practices for the nation's financial sector.
BPI member contributions include:
• $600 Billion in Small Business Loans
• $4.1 Trillion in Loans for Mortgages, Cars, Credit Cards, and Other Consumer Loans
• $478 Billion in Financing to States and Local Communities
As the invited founder and chairman of the Fintech Ideas Festival Technology Advisory Council in 2016, my mandate was to look ten years into the future for financial services CEOs. This is captured in a video with the first CEO-summit held in January 2017. These advisory contributions continued and as a result, I participated at the March 2019 summit and I had a chance to gain perspectives of two of the key organizers behind Fintech Ideas Festival 2019.
As noted by Heather Hogsett Senior Vice President, Technology & Risk Strategy Bank Policy Institute/BITS, “In addition to featuring conversations on the growing importance of partnerships between banks and FinTech firms, the event highlighted how an intense focus on the customer experience is driving changes in business strategy. While several years ago we were talking about the unbundling of the big banks, we are now seeing an era of rebundling and the rise of platform models where a variety of products and services are packaged together to provide the customer a streamlined experience with world-class offerings that are tailored to meet their needs.”
From Chris Feeney Executive Vice President & President, BITS Bank Policy Institute, “The FinTech Ideas Festival brought together many of the top thinkers, innovators and investors who are shaping the future of financial services and challenging the industry's thinking on topics ranging from data and privacy to the impact of 5G and quantum computing. One overarching theme was the growing importance of partnerships as our industries leave an era of disruption and move to one of active collaboration. For our customers this shift is pragmatic, integrated, digital and innovative.”
