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Monday, 9 april 2018 | Redacción CEU
The traditional economic way of thinking is left behind. The collaborative economy phenomenon and the unstoppable development of new technologies are overshadowing the products and services offered in this context due to their transforming and innovative character. The financial environment is being impacted by different disruptive advances like blockchain technology, the Internet of Things, Big Data or cloud computing. But, perhaps one of the vital trends of this midway of change is Artificial Intelligence that promises not only to transform the world of finance, but also our society.
Artificial Intelligence -also known by its acronym AI-, like the rest of contemporaneous technological advances, opens the door to new opportunities and welcomes alternatives that challenge or move away from traditional business models. However, if AI stands out among the rest of the transforming agents, it is because its complete development would involve the transfer to the “robots” of decisive tasks associated with the human intellectual capacity and leave important financial decisions in their “hands”. This fact would be crucial in our society, not only would transform certain areas of the financial system, but, as times goes by, it could completely change the global socioeconomic environment.
The revolution of Artificial Intelligence
We are therefore at a turning point. In the article The Business of Artificial Intelligence by Erik Brynjolfsson and Andrew McAfee, the authors describe Artificial Intelligence and, in particular, Machine Learning as the most important general purpose technology of our era. But why is AI so crucial to our society? Us, human beings are not able to explain how we are capable of doing certain mental processes. Thanks to the development of Artificial Intelligence, we are now able to build systems that learn with the knowledge through patterns to do tasks on their own and also to automate them. And not only that, they are capable of doing it with a very high performance in many areas. In some cases, they are even capable of making decisions without human intervention -Deep Learning-.
This environment where we live characterized by continuous change, the technological advances convergence, the digital transformation and the new challenges that they set out, requires a progressive professional specialization. The ground is increasingly complex. If they do not have a meticulous, detailed and technical knowledge of the space where they work on and are not able to process the amount of information they get, they will not be able to take advantage of the arising opportunities or to keep up with progress. It is precisely the Artificial Intelligence development what contributes to that these experts' mission is not a lost battle in advance, because some tasks that require an extensive dedication go from hours to seconds with its help.
The AI improves practically all the advances of its contemporaries, but the technology that it completes and complements the most is Big Data. Its mission is built on the data processing in large quantities and, in its development, this technology is able to give these data an important added value. Thanks to Big Data, we have a colossal data warehouse, but in order to serve us, we need to know how to interpret them. Artificial Intelligence offers an unprecedented processing capacity that can imitate human intellectual capacity, making it possible to shape that large amount of information
How does AI transform the financial world?
Along with marketing and the automotive industry, the financial sector is one of the most committed environments to the implementation of this technology. There are many examples that show that Artificial Intelligence can reinvent the world of finance. For example, robo-advisors, that are already a phenomenon of financial advice on Wall Street, democratize access to this type of services. Small investors who previously could not opt for this service due to its high cost, now resort to these "robots" in an easy, economical and fast way.
The AI also offers an improvement in terms of security, particularly in the fraud detection and the fight against money laundering, because, through deep learning algorithms, the machines are able to analyze multitude of transactions in few seconds and to identify several types of irregularities in different scenarios. This technology also offers new advantages in the risk management such as the granting of credits based on the evaluation of the credit quality of borrowers, helps identify new opportunities in the stock markets, improves the user experience in services such as electronic banking, enables the offer of personalized products adapted to different types of customers and helps automate a large part of the daily tasks of a bank thanks to the Robotic Process Automatization. The implementation of this technology in the different financial environments contributes to the improvement on efficiency, a greater productivity and a cost reduction.
The development of Artificial Intelligence will not only transform financial agents, but also the own clients. An example of this is that the 84% of the taxpayers would already resort to the use of AI to improve their tax return if they could. With the advancement of this technology, customers will demand faster and simpler consumption experiences. The expectations are very high, but we cannot forget that their development is still in an initial phase. We must also take into account that the impact of this type of innovation in business and the economy will not only be direct, but will be reflected in new complementary advances. Organizations must know how to detect and respond quickly to opportunities and adapt to new scenarios. They should also be alert about the possible risks of an excessive dependency on this type of technology and overcome the obstacles they find along the way.
Machines are more similar to humans than we would think a priori, just like humans, they are not able to communicate everything they know, at least not in a way that we can interpret. By relying on statistics and patterns, not on absolute truths, they can also fall into hidden biases, reproduce their programmers' prejudices or, in short, make mistakes that are difficult to detect or redirect. On the other hand, even if they imitate us, machines still have difficulties in valuing emotional factors or when they require a certain level of empathy. Machines, at least for the moment, do not replace human work, but complement it.
At The CEU IAM Business School we are aware of the impact that have the converging technological advances, like robotics, cloud computing, blockchain, smart contracts, the Internet of Things or the own Artificial Intelligence in the finance world and the need to adapt the education and training in the sector to these new changes. For that reason, we have designed an Advanced Programme in Digital Economy, FINTECH and Intelligent Society (Online) so you are able to acquire a global vision of the digital transformation process and to develop business models adapted to this technological change.