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Index
Cover
Copyright
Title Page
Preface
About the Editors
Acknowledgements
Part 1 AI: Need to Know
Chapter 1 The Future of AI in Finance
The Promise of Deep Learning
Business Applications in Finance
Time for a Reality Check
Safeguards and Systemic Risk
Chapter 2 What Is AI and How to Make It Work for You
1. Be Narrow Minded
2. Weigh the Risk
3. Get the “Last Mile” Right
4. Consider That Less Data May Mean More
5. Do Your Homework
Note
Chapter 3 Getting to Day Zero: Let’s Get the Foundation Right
Challenge 1: A House Built on Sand
Challenge 2: The Digital Transformation Dilemma
Opportunity 1: Share Your Data with the World
Opportunity 2: The Alternative Data Revolution
A Bright Future
Notes
Chapter 4 Navigating a Sea of Information, News and Opinion with Augmented Human Intelligence
Making Sense out of Complex Text through Natural Language Processing (NLP)
Ontologies Link Entities and Thus Create Valuable Connections
How Augmented Human Intelligence Will Change the Way We Read News and Inform Ourselves
Note
Chapter 5 The Seven Deadly Sins of AI
Data
Research Failure
Bias
Explainability
Emotion
Ethics
Organizational Readiness
Conclusion
Chapter 6 A New Internet, Data Banks and Digital World War
The Future of Artificial Intelligence
Reinventing How We Invent
AI Neural Network
The Human API and Digital War: World War III
Chapter 7 AI: A Cross Country Analysis of China versus the West
Notes
Chapter 8 The AI Advantage: Near-Term Workforce Opportunities and Challenges
Backdrop
Enhanced Cognition: The Good News
Macro-Trend Analysis of Workforce Challenges
Pragmatic Suggestions for a Way Forward
Conclusion
Notes
Chapter 9 The Art of Involving Boards in Embracing AI
The Art and Science of Board Dynamics
The Challenge of AI for Boards
Work with Strength-Based Management Techniques
Design and Provide Special Educational Programmes for Board Members
Dare to Change the Composition of the Board
Establish an AI Council
Create a Communication Campaign
Note
Part 2 Deposits and Lending
Chapter 10 AI in Lending
Overview
User Identification
Credit Decisions
Fraud Prevention
Consumer Lending: Proprietary Risk Management Based on Big Data
Credit Decision Powered by Knowledge Graph
SME Lending: Unsecured Loans Backed by AI and Machine Learning
Chatbots Used in Debt Collection
Chapter 11 Financial Technology and China’s Inclusive Finance
Chapter 12 The Future of Deposits and Lending
Value Stores
Future of Deposits
Access to Credit
Changing Expectations
Data Deluge
Future of Lending
Chapter 13 Applications of AI in Deposits and Lending
Alternative Data
Value Chain
Origination and Onboarding
Underwriting
Financing and Contract
Servicing and Payment Collections
Imagine!
How Much Data Is Enough?
How Much Information Do You Store About Your Customers?
Is What You Are Doing Transparent, Ethical and Fair?
Last Word
Chapter 14 Showcase and Customer Service: Leveraging Chatbots in the Banking Industry
Brief History
The Expansion of Chatbots
Banking Applications
Non-Banking Services
Money Matters
Information and Banking Operations
Financial Coaching
Conclusion
Note
Chapter 15 The Power of AI to Transform the Global SME Credit Landscape
Identifying More Creditworthy SMEs
Speed Is of the Essence
Problem Solving, Sector by Sector
The Power of AI to Shift Capital
Note
Chapter 16 Using AI for Credit Assessment in Underserved Segments
Note
Chapter 17 Why Video Games Might Help You Buy Your First House
The Problem
How Do We Bridge the Gap?
Chapter 18 AI Opportunities in the African Financial Sector: Use Cases
Two Significant Challenges: Financial Exclusion and Cybercrime
The solutions widely used in African FinTech ecosystem
AI at the Heart of Innovation FinTech Solutions
The Use of Chatbots
Looking Ahead
Notes
Part 3 Insurance
Chapter 19 Insurance and AI: Choices in Leadership, Purpose and Trust
Insurance: Too Important Not to Lead on AI?
Your Job as Leaders (1): Get the Reality Check
Your Job as Leaders (2): Question the “Absolutes”
Your Job as Leaders (3): Help the Firm Get Purposeful
Your Job as Leaders (4): Bring AI Ethics to the Boardroom
Final Thoughts: Architects of Exclusion — or Enablers of Protection?
VERY Selected Further Reading
Notes
Chapter 20 Drifting into Algocratic Insurance?
AI and Insurance – A Natural Partnership
Insurance turning Algocratic
Regulating the Algocracy
Chapter 21 Moving the AI Needle: Strategies for Health Insurers to Put AI into Practice
What’s the Problem with AI in Health Insurance?
AI Use Cases That Can Move the Needle
Level 1 – Standard AI Solutions
Level 2 – Tailor-Made AI Solutions
Level 3 – Explainable AI Solutions
How to Get There – Strategic Imperatives
Define Clear Use Cases and Demystify the Topic of AI
Intelligently Integrate Partners Instead of Developing Everything Internally
Focus on Solving Real Business Problems
Value Patient Centricity and Gain Patients’ Trust by Ensuring Transparency
Chapter 22 AI and Healthcare: Doctor Will FaceTime You Now!
AI and Healthcare Now
The Economic Opportunity
What Is the Role of Health Insurers in Emerging Healthcare AI Business Models?
Notes
Chapter 23 Using Artificial Intelligence in Commercial Underwriting to Drive Productivity Growth
Chapter 24 The Digitally-Enabled Underwriter: How AI is Transforming Commercial Insurance Underwriting
Why AI, Why Now?
A Deluge of Data, A Drought of Insights
Use Cases for AI in Commercial Insurance Underwriting
The Rise of the Digitally-Enabled Underwriter
We Are Still at the Beginning
Notes
Chapter 25 Improving Policy Life Cycle Management with AI and Data Science
AI-Supported Policy Life Cycle Management: Point of Sale
Re-Scoring and Re-Evaluating the Initial Application after a Claim Has Been Submitted
It’s Not Just about Fraud
Chapter 26 Disrupting the Insurance Value Chain
Products
Product Management
Customer Onboarding
Underwriting
Customer Services
Claims and Settlement Management
Chapter 27 Cutting to the Chase: Mapping AI to the Real-World Insurance Value Chain
Enabling and Applying AI
History vs Present
Computer Vision
Voice and NLP
Internet of Things
Conclusion
Notes
Part 4 Payments
Chapter 28 Artificial Intelligence: The Next Leap Forward in the Payments Revolution
Chapter 29 Frictionless Payments: If or When?
Today’s Security Paradigms Will Not Suffice Tomorrow
Invisible, Precise, Highly Robust Authentication
Rethinking Authentication
Note
Chapter 30 Big Data, AI and Machine Learning: How to Unlock Their Potential in the New Payment Environment
Payments, a Wealth of Data
A Tool to Combat Fraud
Smart Routing
Getting to Know Your Customer
Advanced Analytics for Merchants
Chapter 31 The Rise of Conversational AI Platforms
Towards Invisible Banking and Payments
Notes
Chapter 32 Two Dimensional Virtual Vertical Integration: Solving the Impossible SC Problem
The Cost to the Economy
How Do Current Practices Inflate Consumer Prices? An Illustration
Introducing 2DVVI
But It’s Not Quite so Simple
The Social Dimension
Notes
Part 5 Investment and Wealth Management
Chapter 33 The True Value of AI to Transform Push/Pull Wealth Management Offers
Chapter 34 Machine Learning in Digital Wealth Management
ML in Wealth Management
Prospecting and Conversion, Onboarding and Screening
Client Onboarding and Screening
Product Recommendations and Onboarding
Advisory Process
Investment Research and Trading
Client Attrition
Summary of Different Algorithms and Use Cases for Wealth Management
Data Sharing and Confidentiality
Federated Learning
Chapter 35 The Impact of AI on Environmental, Social and Governance (ESG) Investing: Implications for the Investment Value Chain
Introduction
The Impact of AI on ESG
Mastering the Data Complexity Challenge with AI
Engaging The Investor Community to Address AI Concerns
Collaboration and Engagement
Conclusion
Chapter 36 AI in Indian Investment and Asset Management: Global Perspective
Inherent Issues in India
AI in Investment Management in India
Some New Scenarios
Emergence of New Business Models
Reference
Chapter 37 Finding Order in the Chaos: Investment Selection Using AI
Random Walk Through Efficient Markets: Are Stock Price Fluctuations Predictable?
Bulls, Bears and Butterflies: Markets as Chaotic Systems
Best of Both Worlds: Investing With AI-Driven Decision Enhancement Tools
Predictive Algorithm Developed by I Know First
Chapter 38 Dispelling the Illusion
Data-Based Automation
Front, Middle and/or Back Office?
Implementation Strategy
Implications
Notes
Chapter 39 ETF 2.0: Mega Block Chains with AI
Chapter 40 Fear and Greed
Man vs Machine
Quantum Computing
Convergence of Advanced Technologies
Automated Trading
Wealth Creation by Algorithm
The Financial World of Equals
Part 6 Capital Markets
Chapter 41 Introduction on AI Approaches in Capital Markets
Setting the Scene
What Is Artificial Intelligence?
Using Data Science to Solve Business Problems
Capital Markets Use Cases
Trust, Transparency, and Human Interactions
State of the Art: Selected Highlights 2018/19
Where Next?
Notes
Chapter 42 AI, Machine Learning and the Financial Service Industry: A Primer
Defining Artificial Intelligence
Machine Learning (ML) and Deep Learning (DL) within Finance
Barriers — and the Goldilocks Rule
Notes
Chapter 43 Compliance as an Outcome
Simple Heuristics Lead Human Behaviours
Prevention through Deterrence
Data and AI Strategy
Intelligent Empowerment
Compliance and Business Benefits?
Further reading
Notes
Chapter 44 Alternative Data and MetaQuants: Making the Most of Artificial Intelligence for Visionaries in Capital Markets
Back to Basics: What Is Alt-Data?
Redefining Market Players – The MetaQuant Approach
Can a Hybrid Model (Quantamental + MetaQuant) Boost Investment Results?
Notes
Chapter 45 AI and Capital Markets: Where to Now?
Organizational Efficiency — Inside and Out
Regulatory Developments
Future Enablers
Part 7 Trust, Transparency and Ethics
Chapter 46 Trust in FinTech and AI: Some Introductory Reflections
Tech That Has Legitimacy with a Social Licence
Ethical Innovation in Finance
Clarity of Ethical Purpose and Mission Is Central
Regulation Introduced Clarity and Wider Support for Innovation
Four Ways to Support More Trustworthy, Ethical Innovation in the Financial Services Sector
Chapter 47 Building Trust through Sound Governance
Ethical Challenges for Firms
Ethical Governance
Conclusion
Notes
Chapter 48 Independent AI Ethics Committees and ESG Corporate Reporting on AI as Emerging Corporate and AI Governance Trends
Independent Human Research Review Committees (IHRCs)
World’s First Corporate AI-Focused IHRCs
Axon
Corporate ESG Reporting on AI as a New Paradigm?
Notes
Chapter 49 The Wisdom Vantage
Explainability and Transparency
The Future
Wisdom
Chapter 50 AI and Business Ethics in Financial Markets
Fairness
Privacy
Transparency
Explainability
Accountability
Conclusion
Notes
Chapter 51 AI Trust, Ethics, Transparency and Enablement
What Is Intelligent Empowerment and Why Is it Topical?
The FS AI/ML Trust Issue
TETE Proposal
The TETE Need and Challenges
How to Implement a TETE Framework
Conclusion
Bibliography
Chapter 52 Invisible Hand, Spontaneous Order and Artificial Intelligence
Chapter 53 Transforming Black Box AI in the Finance Industry: Explainable AI that Is Intuitive and Prescriptive
The Challenges Hindering Wider AI Implementation
How to Identify an Explainable Algorithm
Unlocking a New Level of Explainability with Prescriptive AI
Industry Use Cases and Compelling Results
Chapter 54 Making Data Your Most Valuable Asset
Why Do We Need Data Ethics Now?
Treating Data as the Asset
Consequences of Data Mistrust
Chapter 55 The Data Promise
The Client Data Promise
Example from the Wealth Management World
Notes
Part 8 Legal Risk and Regulation
Chapter 56 AI and the Law: Challenges and Risks for the Financial Services Sector
Sci-Fi — or Real Life?
Racial Bias — the Tip of the Iceberg?
Legal and Ethical Issues for Your Watch List
The GDPR – a Deeper Dive on Key Data Principles
Self-Regulation – A Viable Strategy?
Notes
Chapter 57 Algorithm Assurance
Chapter 58 Regulation of AI within the Financial Services Sector
The Need for Regulation
Common Technical Standards
Regulatory Measures
Questions of Liability
Future Regulation
Note
Chapter 59 Is Risk-Based Regulation the Most Efficient Strategy to Rule the Unknown Risks Brought by FinTech?
Notes
Chapter 60 The Changing Face of Regulatory, Compliance and Audit
Why We Need Compliance and Audit
Identification of Risks
A Vision for Tomorrow
Conclusion
Chapter 61 Robocop on Wall Street
Setting the Scene – The Why
Mapping out the RegTech and Legal Risk AI Landscape (The What)
Key Building Blocks of AI Solutions Addressing Legal Risk and Regulation (The How)
Judgement and Liability
Notes
Chapter 62 Sure, AI Can Answer Our Questions – But Who Will Answer Our Questions About AI?
Notes
Chapter 63 Technology for Regulations and Compliance: Fit4Future!
Evolution of RegTech
RegTech 3.0: Phases of Development
Conclusion
Part 9 The Future of AI in Finance
Chapter 64 Welcome to the Future
The Evolving Technology Landscape
Beyond Digital Transformation: Thinking Like a Digital Native
Innovation at the Speed of Thought
A Potentially Utopian Future
Chapter 65 An AI-Embedded Financial Future
Job Displacement
Betting the House on AI
The Spending Conundrum
Intelligence, Employment and Social Purpose
Conclusion
Notes
Chapter 66 Open Banking, Blockchain and AI: The Building Blocks for Web 3.0
Genesis
Data Marketplace for the People
The Inversion
Conclusion
Chapter 67 Automated Machine Learning and Federated Learning
Introduction
Shortage of Data
Lack of Trust in AI
Shortage of Qualified Personnel
Federated Learning
Notes
Chapter 68 Deep Learning and Financial Regulation
What Do Regulators Do?
Endless Financial Crises…
…That Are Getting Worse
Autonomous Regulatory Agents to the Rescue
We Created This Mess – We Can Fix It!
Chapter 69 AI for Development and Prosperity
Natural Disasters
Capital Markets
AI for Diversity and Inclusion
Conclusion
Notes
Chapter 70 The AI Trends That Will Shape Winning Businesses
Natural Language Understanding
Multi-Language
Human Personality and Emotional Understanding
Support Process Optimization
Sales Process Optimization
Is China Coming?
Looking Forward
Chapter 71 Mastering the AI Talent Transformation: Present and Future
The AI-Prediction Debate: Technology Anxiety and AI, Is This Time Different?
But, Will AI Eliminate All Jobs in the Future?
From the Future of Work Debate to the Wealth Distribution and Inequality Problem
Is Our Future Preordained by AI Prediction Capabilities?
The AI-in-Practice Challenge: Narrow AI and Its Implementation Challenge
AI and Human Strengths and Weaknesses
The Need for an AI–Human Collaboration Approach
Notes
Chapter 72 Humans versus Machines: Who Will Still Have a Job in 50 Years?
The New Normal
A New Type of Leadership
Workforce Disruption
Focusing on Soft Skills
Reskilling and New Skilling to Maintain Relevance
Chapter 73 Is AI Ready for Morality?
COMPAS
PredPol
Gender Bias
Morality in the Context of Self-Aware AI
AI in the Service of Society
Open Questions
Chapter 74 Confessions of an AI Portfolio Manager
2030: Birth
2050: Being Renamed “Talan Uring”
2055: Learning to Relate and Feel
2056: Breakthrough in Neuron Manipulation
2060: Genetic Algorithms Entered My Life, I Became an “EA”
2061: Humans Tried to Catch up through Thought-Powered Trading
2065: I Started to Apply GANs
2067: I Rebuilt My Own Hardware
2070: Market Super-Intelligence, the World Model
2072: Human Traders Sought Justice
2075: I Extended My “World Model” beyond Planet Earth
2080: I Became an Algorithm Analysing the Work of Other Algorithms
2090: Discovery of the Namuh Civilization
2095: My Rediscovery of Humankind
Appendix
List of Contributors
Index
End User License Agreement
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