If you are looking for an answer to the question What is Artificial Intelligence? and you only have a minute, then here's the definition the Association for the Advancement of Artificial Intelligence offers on its home page: "the scientific understanding of the mechanisms underlying thought and intelligent behavior and their embodiment in machines."
However, if you are fortunate enough to have more than a minute, then please get ready to embark upon an exciting journey exploring AI (but beware, it could last a lifetime) …
Uber, once the enfant terrible of the tech industry, put on its big kid pants and publicly filed for IPO this week, attempting to prove, once and for all, that it's got its crap together. Its filing reveals a sprawling company that's made strides since ex-CEO Travis Kalanick was dropping Boober jokes back in 2014--but one that also has a few big, hulking problems on the horizon, like fighting drivers on employee classification issues and, you know, achieving profitability. Also in transpo people and companies trying to prove themselves: Tesla goes off-menu for the $35,000 Model 3, ostensibly to shore up cash and streamline production; another industry insider says, yes, self-driving car hype got ahead of reality; and Audi argues its slightly dispiriting E-tron range numbers matter little compared to its luxury features. Let's get you caught up. Why do new premium electric vehicles keep coming up short on range?
Senior, PhD-level engineers with a background in artificial intelligence and machine learning may have more leverage than just about anyone on Wall Street. Investment banks are desperate for people with AI experience and are going to no end to bring them aboard, industry experience bedamned. J.P. Morgan recently poached AI specialists from Google, Facebook and two leading research universities in the U.S. Goldman Sachs hired away a machine learning guru from Amazon, while Morgan Stanley hired an AI and cloud engineering expert with the background in fashion. Needless to say, banks are surely sweetening offers to recruit expert AI minds away from tech giants and comfy university positions. That said, there aren't a massive number of AI jobs currently available on Wall Street as use of the technology is just ramping up.
I get that there's too much TV, I really do. Even so, I can't understand why no one's been talking about Black Monday, the Showtime comedy about Wall Street in the '80s that stars Don Cheadle and Regina Hall. On some level I want to punish those of you who haven't given the show a chance, but instead I'm going to politely ask that, seeing as the first season ended Sunday, you watch the whole thing: Now that it's waiting for you in one bingeable chunk, you really have no excuse. Its co-creator David Caspe (of the fan favorite Happy Endings) suggested as much in an interview with the Hollywood Reporter that doubled as a pitch for viewers to consider a bender: "A lot of times if you don't break out right away in a crazy way, it's between seasons one and two that people find stuff. The show is obviously written as incredibly serialized, and I think in some ways getting to watch a few in a row might be helpful for a viewer."
Yet nine floors up, in an office bereft of any form of signage, a new artificially intelligent investor is taking shape. This trading robot, developed by a team of academic roboticists, mathematicians, and ex-bankers, is the brainchild of fledgling hedge fund Aidyia, which has been seed-funded by venture capitalist Emanuel Breiter. Scheduled to start trading US equities this year, the team hopes it will deliver returns on the three years and millions of dollars it has taken to build, by turning huge swathes of financial and linguistic data into unique investment strategies. "It's seeing patterns that aren't easy for the human mind to wrap itself around," said Aidyia's co-founder and chief scientist, Ben Goertzel. Computer-assisted trading is nothing new.
New technologies have enabled tremendous evolution in the finance industry, especially over the past decade. Thanks to machine learning and artificial intelligence (AI), investors and consumers are getting access to more innovative tools, new types of financial products and a new potential for growth. So, what kind of impact is AI having on banking and Wall Street, and how might the resulting impact on entrepreneurs evolve in 2019? Some of the best AI developments have been reserved for private banks, professional investors, venture capital firms and other major organizations. But 2019 and beyond will likely bring the trend of more accessibility for consumers, too.
Wall Street's robot revolution has begun. JPMorgan Chase & Co. is rolling out a program called LOXM that executes equities trades so well, it's replacing the humans who used to do that. Goldman Sachs is in the midst of automating the initial public offering process. Innovations in financial technology -- fintech -- are creating competition in fields long dominated by the institutions. Vikram Pandit, who ran Citigroup Inc. during the financial crisis, says technological advances could make 30 percent of banking jobs disappear in five years.
US company Lyft has filed plans with the regulator in Washington for a flotation as it races for funding against Uber, the rival ride-hailing company. In a statement on Thursday, Lyft announced it had submitted a draft registration statement with the US Securities and Exchange Commission (SEC), in a move which sets it up to be one of the first large tech flotations of 2019. The number of shares on offer and the price range for the proposed offering have not yet been determined, Lyft said. The company was valued at $15.1bn (£11.8bn) at its latest funding round in June, when investors led by Fidelity Investments poured $600m into the firm. Uber, by contrast, has been valued at $120bn in recent reports.
ONE THEORY HAS ARISEN in the decade since the subprime mortgage crisis: Machines may be better than humans at giving out home loans. A new Fannie Mae survey of mortgage lenders found that 40% of mortgage banks have deployed A.I.--using it to automate the document-heavy application process, detect fraud, and predict a borrower's likelihood of default. San Francisco–based Blend, for one, provides its online mortgage-application software to 114 lenders, including lending giant Wells Fargo, shaving at least a week off the approval process. Could it have prevented the mortgage meltdown? Maybe not entirely, but it might have lessened the severity as machines flagged warning signs sooner.
Last week, Ben Goertzel and his company, Aidyia, turned on a hedge fund that makes all stock trades using artificial intelligence--no human intervention required. "If we all die," says Goertzel, a longtime AI guru and the company's chief scientist, "it would keep trading." Goertzel and other humans built the system, of course, and they'll continue to modify it as needed. But their creation identifies and executes trades entirely on its own, drawing on multiple forms of AI, including one inspired by genetic evolution and another based on probabilistic logic. Each day, after analyzing everything from market prices and volumes to macroeconomic data and corporate accounting documents, these AI engines make their own market predictions and then "vote" on the best course of action.
Smart technology is as much a threat to strategy consulting as it is proving to be to Wall Street. This article is part of an MIT SMR initiative exploring how technology is reshaping the practice of management. We all understand that AI is a disruptive force in the market, but it still takes some convincing for many of us to accept just how deeply AI will affect even highly skilled knowledge-based industries. Management consulting offers a prime example. A $250 billion industry filled with some of the smartest people on the planet, consulting tends to view itself as an elite, untouchable echelon of the business world.