Davos chatter about artificial intelligence has moved on over the years from what it is and how to implement it, to questions about the technology’s ethical implications.
The financial services industry has barely recovered from a decade-long global crisis in which ethical practices were found lacking, to say the least. A lot of people want to do better and there’s a lot of speculation that millennials are going to expect better.
In the investing world, ESG (environmental, social and governance) factors are leading the alternative data trend, and the latest sign of the times came from BlackRock CEO Larry Fink, who spoke about financial inclusion in Davos, and made headlines for sending a letter to the heads of the world’s largest public companies urging them to prioritize ethical policies.
Observers may be cynical about these statements, but there’s no doubt that Davos is the place where ideas about ethics in futuristic technologies get heard and discussed.
Now in his fourth year of Davos attendance, David Shrier is the CEO of data analytics firm, Distilled Analytics, and an Associate Fellow at Saïd Business School at the University of Oxford. The mood for financial AI at the annual event, he said, can be described as addressing some of the more fundamental issues of responsible innovation.
In financial services, the conversation is still quite binary, he noted. On one side, executives are afraid they will lose their jobs, and on the other, they see dollar signs in cost savings.
He added that a lot of discussion has been about “reskilling the workforce for an AI future”. During a lunch session, Shrier and Distilled Analytics’ co-founder, Alex “Sandy” Pentland, discussed: The Human Strategy: How can we live in a world of AI, Big Data, and Echo Chambers?
“There are some real opportunities to get a positive transformation in society and at business organizations by bringing people and machines together to collaborate more effectively,” said Shrier of the session. “The boring, mundane, low level tasks get automated away, so they can focus on higher order higher skill metacognition.”
Accenture CEO (North America), Julie Sweet, spoke on a panel about AI and the management consultancy’s human strategy in the wake of enterprise-wide automation. Sweet reinvested 60%% of those savings into reskilling her workforce, leading to dramatic growth rates.
— David L. Shrier (@DavidShrier) January 25, 2018
Financial services could learn a few things from that example, Shrier noted.
Right now, executives talk about replacing tellers with mobile apps, financial advisors with robo-advisors, or the middle and back office with blockchain. He estimated that this translates collectively to $100 billion in cost savings per year to be realized within 10 years, and 3 million jobs or more that could disappear in that same time period.
“A more enlightened and frankly more long-term and profitable strategy for shareholders is if you were to reskill (workers displaced by AI) into different and other kinds of roles that are symbiotic with artificial intelligence rather than simply replaced by them.”
At Oxford’s Saïd Business School, Shrier heads the Fintech and Blockchain programs: “We’re trying to give financial services industry workers a chance to reposition themselves around innovation and acquire new knowledge and capabilities to deal with it.”
Globalist v protectionist mindsets
If 2017 was the year of AI, it was also the first year of the Trump presidency. And it’s easy to see how the two could be at odds with one another.
Shrier does have an admitted bias towards globalization: he’s an entrepreneur who runs a data analytics firm working with datasets from all over the world. And Davos, by its nature, is a very globalized gathering.
Of course, Trump is the cause of fascination, but he did not dominate the dialogue this year in the same way as last year, Shrier noted, adding that he doesn’t agree with the narrative that the US president is dominating the agenda.
“I am out meeting with lots of corporate executives and government officials and others in a series of bilateral meetings and programs, and what I am hearing is people are putting their minds to just getting on with the work,” he said.
Far from being obstructionist, multi-governmental organizations are keen to figure out ways to be partners and collaborators in the adoption of new technologies like AI, advanced analytics, and blockchain, Shrier said.
And, in a globalized world of data, regulations like the GDPR (General Data Protection Regulation) is not only good for citizens of the EU, it’s also good for companies, and very much a “globalist” policy, in Shrier’s opinion.
For one, companies are not going to be able to sell your personal data and preferences to third-party state actors who then use them to inform the course of elections, he noted.
“Allowing the individual to regain control of their personal data and having a right to be forgotten also means that people can engage in trying out new kinds of data services, new kinds of technologies. Now they can actually get their personal data and that’s going to spur a whole other wave of innovation,” he said.
In terms of the use of financial AI in addressing the unbanked world, the fact that it’s a data play should raise eyebrows in the absence of legislation that protects individuals.
“We’ve had a problem with financial inclusion, we’ve had a problem with digital inclusion, and what we need to do is avoid a problem with data inclusion,” he said.
But the potential is exciting as well: “Using data, you can now give banking services to people who were previously excluded, and that’s something my company Distilled Analytics helps, but you can also give identity to the 1.1 billion people in the world who have no recognized legal identities.”
In a recent series of appearances, Nobel Laureate and microfinance guru Muhammad Yunus has been increasingly negative about AI, and quoted as calling it a “greedy technology”.
On such statements, Shrier said: “I think that is a technophobic and foolhardy statement because there’s nothing intrinsically wrong with AI, it’s how we use it. And so we need to be responsible users.”
Preaching and practising
Along with the importance of responsible innovation, is the complicated matter of practising what you preach.
And if there’s a place where fintech is lagging, it’s in gender balance and diversity, with a major topic of discussion at Davos being the underrepresentation of women executives on some panels.
Positive reaction from @ArjunKharpal and fellow panelist @DavidShrier at #WEF2018 @CNBC event when I said no more participating in panel discussions unless we have gender balance. 🙏 If we do this together we will make a difference #GenderParity pic.twitter.com/mFuaLBBkaL
— Inga Beale (@IngaBeale) January 26, 2018
Some of the chatter is sadly familiar about what one would wish were outdated views.
According to Shrier: “Even in Davos, even in 2018, people like Silicon Valley tech company presidents are making ridiculous statements like women don’t really like computers and they don’t really like staring at screens so that is why I don’t have a lot of women working at my company.”
“We have a lot more work to do if someone…(hasn’t) realized the fallacy embedded in that statement,” he said.