Financial Tremors?

September 12, 2018

The folks with crypto currency may be having a bit of a thrill. The volatility suggests that bits and bytes may not be as stable as owning a chunk of real estate in Tokyo.

We have also noted rumblings elsewhere. Smart software, for example. Many hopes, of course, but there may be some downstream consequences. Salmon finding life difficult may be one metaphor.

It has become a weekly, maybe even daily, routine: some alarmist talks about the dangers of AI on a particular industry, we get scared, the news cycle moves on, and everyone forgets. However, a warning is lurking that has the potential to have some staying power. We learned more from a recent Technology Review story, “The World Economic Forum Warns That AI Might Destabilize The Financial System.”

We learned:

[A]rtificial intelligence will disrupt the industry by allowing early adopters to outmaneuver competitors. It also suggests that the technology will create more convenient products for consumers, such as sophisticated tools for managing personal finances and investments.

We also noted:

But most notably, the report points to the potential for big financial institutions to build machine-learning-based services that live in the cloud and are accessed by other institutions.

This is a very volatile situation, especially as so much finance is starting to hinge on machine learning. For example, many retirement plans are shifting funds around based on AI insights. But take hope for what it is. Quantum computing may be just around the corner.

Patrick Roland, September 13, 2018

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