A lot can be said about the dramatic changes shaping the finance sector today. But I think this period of transition presents an incredible opportunity.
We can build new banks from the ground up. We can create smarter insurance organizations that make life easier for our customers.
This is why I like to think of the future as the ‘smart society age’. In bringing smart tech into the office, and making it work for us, we can build better business models and a better world.
A big part of this will involve artificial intelligence (AI) and quantum computing. These two technologies are front and centre in the media. They are controversial, complex and compelling in equal measure.
This means they are well worth talking about – and on Thursday 25th October I’m going to do just that, when I host a webinar examining the status of AI and quantum computing as they pertain to the financial services sector.
In this blog I’m going to give you a snippet of my thoughts on these technologies – and their potential to change our sector for good – which I will expand on further in my upcoming webinar.
AI in the market today
AI is something that we’ve been talking about for around thirty years. The question is: where are we now?
The technology is certainly becoming steadily more mature. Four years ago a computer program simulating a 13 year old boy passed the Turing test, which measures how capable artificial intelligence is by seeing whether a user could mistake it for a human.
So in terms of the maturity timeline, AI is now at quite an advanced stage. This is clear from the market, where there are many deep language platforms available. So what are banks and insurance companies doing with this capability?
There are obvious applications for AI in areas like training, legal work and fraud detection. In fact, wherever there is repetitive work, or patterns to be spotted, artificial intelligence can fill a vitally important role.
But there are some more exciting use cases available for those in the financial services sector. Insurers have started developing self-service chat-bots for customers to use when trying to ascertain whether or not they have a valid claim.
New forms of computing
The story of technology is one of exponential growth. Think about it this way: a lot of the ‘super computers’ from the eighties are slower than the machine you carry in your smartphone.
And part of this comes down to the fact that computers are always changing. Today there are three areas of computing that are set to dominate the tech landscape for the foreseeable future:
- Edge computing
- Quantum computing
Quantum computing is the one I am interested in today, because it’s the beginning of something totally new.
To date, nobody has managed to build a working example of a quantum computer. That’s how new this technology is – 2018 is ‘year 0’ on the quantum computing timeline.
The good thing about quantum computing is that it will be able to solve highly complex problems that we currently find unsolvable – and I’ll talk more about this later.
Quantum computers will have mathematical powers beyond anything we’ve seen before. This has serious implications for the systems that keep our online information secure.
Encryption relies on complex maths that a quantum computer would be able to do instantly. This means there’s now a race to build technology able to resist quantum hacking.
An answer to the industry’s biggest problems
The main difference between the quantum computers and the computers we have today are the values they use. In a normal PC, everything is built out of 1s and 0s.
A quantum computer uses 1s, 0s and ‘qubits’. These are quantum systems with two states – meaning they can store much more information than just a 1 or 0.
The qubit acts in a special way. If you were playing tennis with a qubit as the ball, and you smashed it into the net, it wouldn’t stop. Qubits hold different positions simultaneously, and are not blocked by things in their way.
This enables you to solve previously unsolvable problems – of which the finance industry has many.
For example, there’s an eternal difficulty surrounding cash machines. You want to fill all your cash machines, in different places, with the right amount of money for each location, which varies with the number of people who visit each machine. And you want to keep the total amount of money deposited across all the cash machines as low as possible.
This is a really difficult thing to calculate, thanks to the huge number of variables involved. But it’s something that the quantum computer would be able to do with ease.
There are similarly big problems involved in portfolio management, trading, calculating loans and carrying out credit ratings. The power of quantum computing will be invaluable to finance organizations here.
Plus, quantum computing can supercharge your AI. Putting the two technologies together vastly accelerates their efficacy, so it’s a win-win situation.
An exciting future ahead for the FS sector
We don’t know where AI or quantum computing will take us. So much of the technology’s potential remains untapped – and the best place to start is by experimenting.
If we lead with co-creation, and keep an open mind to the opportunities that are constantly emerging, we’ll be well on our way to discovering what AI and quantum computing means for the finance sector.