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#433696 3 Big Ways Tech Is Disrupting Global ...
Disruptive business models are often powered by alternative financing. In Part 1 of this series, I discussed how mobile is redefining money and banking and shared some of the dramatic transformations in the global remittance infrastructure.
In this article, we’ll discuss:
Peer-to-peer lending
AI financial advisors and robo traders
Seamless Transactions
Let’s dive right back in…
Decentralized Lending = Democratized Access to Finances
Peer-to-peer (P2P) lending is an age-old practice, traditionally with high risk and extreme locality. Now, the P2P funding model is being digitized and delocalized, bringing lending online and across borders.
Zopa, the first official crowdlending platform, arrived in the United Kingdom in 2004. Since then, the consumer crowdlending platform has facilitated lending of over 3 billion euros ($3.5 billion USD) of loans.
Person-to-business crowdlending took off, again in the U.K., in 2005 with Funding Circle, now with over 5 billion euros (~5.8 billion USD) of capital loaned to small businesses around the world.
Crowdlending next took off in the US in 2006, with platforms like Prosper and Lending Club. The US crowdlending industry has boomed to $21 billion in loans, across 515,000 loans.
Let’s take a step back… to a time before banks, when lending took place between trusted neighbors in small villages across the globe. Lending started as peer-to-peer transactions.
As villages turned into towns, towns turned into cities, and cities turned into sprawling metropolises, neighborly trust and the ability to communicate across urban landscapes broke down. That’s where banks and other financial institutions came into play—to add trust back into the lending equation.
With crowdlending, we are evidently returning to this pre-centralized-banking model of loans, and moving away from cumbersome intermediaries (e.g. high fees, regulations, and extra complexity).
Fueled by the permeation of the internet, P2P lending took on a new form as ‘crowdlending’ in the early 2000s. Now, as blockchain and artificial intelligence arrive on the digital scene, P2P lending platforms are being overhauled with transparency, accountability, reliability, and immutability.
Artificial Intelligence Micro Lending & Credit Scores
We are beginning to augment our quantitative decision-making with neural networks processing borrowers’ financial data to determine their financial ‘fate’ (or, as some call it, your credit score). Companies like Smart Finance Group (backed by Kai Fu Lee and Sinovation Ventures) are using artificial intelligence to minimize default rates for tens of millions of microloans.
Smart Finance is fueled by users’ personal data, particularly smartphone data and usage behavior. Users are required to give Smart Finance access to their smartphone data, so that Smart Finance’s artificial intelligence engine can generate a credit score from the personal information.
The benefits of this AI-powered lending platform do not stop at increased loan payback rates; there’s a massive speed increase as well. Smart Finance loans are frequently approved in under eight seconds. As we’ve seen with other artificial intelligence disruptions, data is the new gold.
Digitizing access to P2P loans paves the way for billions of people currently without access to banking to leapfrog the centralized banking system, just as Africa bypassed landline phones and went straight to mobile. Leapfrogging centralized banking and the credit system is exactly what Smart Finance has done for hundreds of millions of people in China.
Blockchain-Backed Crowdlending
As artificial intelligence accesses even the most mundane mobile browsing data to assign credit scores, blockchain technologies, particularly immutable ledgers and smart contracts, are massive disruptors to the archaic banking system, building additional trust and transparency on top of current P2P lending models.
Immutable ledgers provide the necessary transparency for accurate credit and loan defaulting history. Smart contracts executed on these immutable ledgers bring the critical ability to digitally replace cumbersome, expensive third parties (like banks), allowing individual borrowers or businesses to directly connect with willing lenders.
Two of the leading blockchain platforms for P2P lending are ETHLend and SALT Lending.
ETHLend is an Ethereum-based decentralized application aiming to bring transparency and trust to P2P lending through Ethereum network smart contracts.
Secure Automated Lending Technology (SALT) allows cryptocurrency asset holders to use their digital assets as collateral for cash loans, without the need to liquidate their holdings, giving rise to a digital-asset-backed lending market.
While blockchain poses a threat to many of the large, centralized banking institutions, some are taking advantage of the new technology to optimize their internal lending, credit scoring, and collateral operations.
In March 2018, ING and Credit Suisse successfully exchanged 25 million euros using HQLA-X, a blockchain-based collateral lending platform.
HQLA-X runs on the R3 Corda blockchain, a platform designed specifically to help heritage financial and commerce institutions migrate away from their inefficient legacy financial infrastructure.
Blockchain and tokenization are going through their own fintech and regulation shakeup right now. In a future blog, I’ll discuss the various efforts to more readily assure smart contracts, and the disruptive business model of security tokens and the US Securities and Exchange Commission.
Parallels to the Global Abundance of Capital
The abundance of capital being created by the advent of P2P loans closely relates to the unprecedented global abundance of capital.
Initial coin offerings (ICOs) and crowdfunding are taking a strong stand in disrupting the $164 billion venture capital market. The total amount invested in ICOs has risen from $6.6 billion in 2017 to $7.15 billion USD in the first half of 2018. Crowdfunding helped projects raise more than $34 billion in 2017, with experts projecting that global crowdfunding investments will reach $300 billion by 2025.
In the last year alone, using ICOs, over a dozen projects have raised hundreds of millions of dollars in mere hours. Take Filecoin, for example, which raised $257 million in only 30 days; its first $135 million was raised in the first hour. Similarly, the Dragon Coin project (which itself is revolutionizing remittance in high-stakes casinos around the world) raised $320 million in its 30-day public ICO.
Some Important Takeaways…
Technology-backed fundraising and financial services are disrupting the world’s largest financial institutions. Anyone, anywhere, at anytime will be able to access the capital they need to pursue their idea.
The speed at which we can go from “I’ve got an idea” to “I run a billion-dollar company” is moving faster than ever.
Following Ray Kurzweil’s Law of Accelerating Returns, the rapid decrease in time to access capital is intimately linked (and greatly dependent on) a financial infrastructure (technology, institutions, platforms, and policies) that can adapt and evolve just as rapidly.
This new abundance of capital requires financial decision-making with ever-higher market prediction precision. That’s exactly where artificial intelligence is already playing a massive role.
Artificial Intelligence, Robo Traders, and Financial Advisors
On May 6, 2010, the Dow Jones Industrial Average suddenly collapsed by 998.5 points (equal to 8 percent, or $1 trillion). The crash lasted over 35 minutes and is now known as the ‘Flash Crash’. While no one knows the specific reason for this 2010 stock market anomaly, experts widely agree that the Flash Crash had to do with algorithmic trading.
With the ability to have instant, trillion-dollar market impacts, algorithmic trading and artificial intelligence are undoubtedly ingrained in how financial markets operate.
In 2017, CNBC.com estimated that 90 percent of daily trading volume in stock trading is done by machine algorithms, and only 10 percent is carried out directly by humans.
Artificial intelligence and financial management algorithms are not only available to top Wall Street players.
Robo-advisor financial management apps, like Wealthfront and Betterment, are rapidly permeating the global market. Wealthfront currently has $9.5 billion in assets under management, and Betterment has $10 billion.
Artificial intelligent financial agents are already helping financial institutions protect your money and fight fraud. A prime application for machine learning is in detecting anomalies in your spending and transaction habits, and flagging potentially fraudulent transactions.
As artificial intelligence continues to exponentially increase in power and capabilities, increasingly powerful trading and financial management bots will come online, finding massive new and previously lost streams of wealth.
How else are artificial intelligence and automation transforming finance?
Disruptive Remittance and Seamless Transactions
When was the last time you paid in cash at a toll booth? How about for a taxi ride?
EZ-Pass, the electronic tolling company implemented extensively on the East Coast, has done wonders to reduce traffic congestion and increase traffic flow.
Driving down I-95 on the East Coast of the United States, drivers rarely notice their financial transaction with the state’s tolling agencies. The transactions are seamless.
The Uber app enables me to travel without my wallet. I can forget about payment on my trip, free up my mental bandwidth and time for higher-priority tasks. The entire process is digitized and, by extension, automated and integrated into Uber’s platform (Note: This incredible convenience many times causes me to accidentally walk out of taxi cabs without paying!).
In January 2018, we saw the success of the first cutting-edge, AI-powered Amazon Go store open in Seattle, Washington. The store marked a new era in remittance and transactions. Gone are the days of carrying credit cards and cash, and gone are the cash registers. And now, on the heals of these early ‘beta-tests’, Amazon is considering opening as many as 3,000 of these cashierless stores by 2023.
Amazon Go stores use AI algorithms that watch various video feeds (from advanced cameras) throughout the store to identify who picks up groceries, exactly what products they select, and how much to charge that person when they walk out of the store. It’s a grab and go experience.
Let’s extrapolate the notion of seamless, integrated payment systems from Amazon Go and Uber’s removal of post-ride payment to the rest of our day-to-day experience.
Imagine this near future:
As you near the front door of your home, your AI assistant summons a self-driving Uber that takes you to the Hyperloop station (after all, you work in L.A. but live in San Francisco).
At the station, you board your pod, without noticing that your ticket purchase was settled via a wireless payment checkpoint.
After work, you stop at the Amazon Go and pick up dinner. Your virtual AI assistant passes your Amazon account information to the store’s payment checkpoint, as the store’s cameras and sensors track you, your cart and charge you auto-magically.
At home, unbeknownst to you, your AI has already restocked your fridge and pantry with whatever items you failed to pick up at the Amazon Go.
Once we remove the actively transacting aspect of finance, what else becomes possible?
Top Conclusions
Extraordinary transformations are happening in the finance world. We’ve only scratched the surface of the fintech revolution. All of these transformative financial technologies require high-fidelity assurance, robust insurance, and a mechanism for storing value.
I’ll dive into each of these other facets of financial services in future articles.
For now, thanks to coming global communication networks being deployed on 5G, Alphabet’s LUNE, SpaceX’s Starlink and OneWeb, by 2024, nearly all 8 billion people on Earth will be online.
Once connected, these new minds, entrepreneurs, and customers need access to money and financial services to meaningfully participate in the world economy.
By connecting lenders and borrowers around the globe, decentralized lending drives down global interest rates, increases global financial market participation, and enables economic opportunity to the billions of people who are about to come online.
We’re living in the most abundant time in human history, and fintech is just getting started.
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Posted in Human Robots
#433506 MIT’s New Robot Taught Itself to Pick ...
Back in 2016, somewhere in a Google-owned warehouse, more than a dozen robotic arms sat for hours quietly grasping objects of various shapes and sizes. For hours on end, they taught themselves how to pick up and hold the items appropriately—mimicking the way a baby gradually learns to use its hands.
Now, scientists from MIT have made a new breakthrough in machine learning: their new system can not only teach itself to see and identify objects, but also understand how best to manipulate them.
This means that, armed with the new machine learning routine referred to as “dense object nets (DON),” the robot would be capable of picking up an object that it’s never seen before, or in an unfamiliar orientation, without resorting to trial and error—exactly as a human would.
The deceptively simple ability to dexterously manipulate objects with our hands is a huge part of why humans are the dominant species on the planet. We take it for granted. Hardware innovations like the Shadow Dexterous Hand have enabled robots to softly grip and manipulate delicate objects for many years, but the software required to control these precision-engineered machines in a range of circumstances has proved harder to develop.
This was not for want of trying. The Amazon Robotics Challenge offers millions of dollars in prizes (and potentially far more in contracts, as their $775m acquisition of Kiva Systems shows) for the best dexterous robot able to pick and package items in their warehouses. The lucrative dream of a fully-automated delivery system is missing this crucial ability.
Meanwhile, the Robocup@home challenge—an offshoot of the popular Robocup tournament for soccer-playing robots—aims to make everyone’s dream of having a robot butler a reality. The competition involves teams drilling their robots through simple household tasks that require social interaction or object manipulation, like helping to carry the shopping, sorting items onto a shelf, or guiding tourists around a museum.
Yet all of these endeavors have proved difficult; the tasks often have to be simplified to enable the robot to complete them at all. New or unexpected elements, such as those encountered in real life, more often than not throw the system entirely. Programming the robot’s every move in explicit detail is not a scalable solution: this can work in the highly-controlled world of the assembly line, but not in everyday life.
Computer vision is improving all the time. Neural networks, including those you train every time you prove that you’re not a robot with CAPTCHA, are getting better at sorting objects into categories, and identifying them based on sparse or incomplete data, such as when they are occluded, or in different lighting.
But many of these systems require enormous amounts of input data, which is impractical, slow to generate, and often needs to be laboriously categorized by humans. There are entirely new jobs that require people to label, categorize, and sift large bodies of data ready for supervised machine learning. This can make machine learning undemocratic. If you’re Google, you can make thousands of unwitting volunteers label your images for you with CAPTCHA. If you’re IBM, you can hire people to manually label that data. If you’re an individual or startup trying something new, however, you will struggle to access the vast troves of labeled data available to the bigger players.
This is why new systems that can potentially train themselves over time or that allow robots to deal with situations they’ve never seen before without mountains of labelled data are a holy grail in artificial intelligence. The work done by MIT’s Computer Science and Artificial Intelligence Laboratory (CSAIL) is part of a new wave of “self-supervised” machine learning systems—little of the data used was labeled by humans.
The robot first inspects the new object from multiple angles, building up a 3D picture of the object with its own coordinate system. This then allows the robotic arm to identify a particular feature on the object—such as a handle, or the tongue of a shoe—from various different angles, based on its relative distance to other grid points.
This is the real innovation: the new means of representing objects to grasp as mapped-out 3D objects, with grid points and subsections of their own. Rather than using a computer vision algorithm to identify a door handle, and then activating a door handle grasping subroutine, the DON system treats all objects by making these spatial maps before classifying or manipulating them, enabling it to deal with a greater range of objects than in other approaches.
“Many approaches to manipulation can’t identify specific parts of an object across the many orientations that object may encounter,” said PhD student Lucas Manuelli, who wrote a new paper about the system with lead author and fellow student Pete Florence, alongside MIT professor Russ Tedrake. “For example, existing algorithms would be unable to grasp a mug by its handle, especially if the mug could be in multiple orientations, like upright, or on its side.”
Class-specific descriptors, which can be applied to the object features, can allow the robot arm to identify a mug, find the handle, and pick the mug up appropriately. Object-specific descriptors allow the robot arm to select a particular mug from a group of similar items. I’m already dreaming of a robot butler reliably picking my favourite mug when it serves me coffee in the morning.
Google’s robot arm-y was an attempt to develop a general grasping algorithm: one that could identify, categorize, and appropriately grip as many items as possible. This requires a great deal of training time and data, which is why Google parallelized their project by having 14 robot arms feed data into a single neural network brain: even then, the algorithm may fail with highly specific tasks. Specialist grasping algorithms might require less training if they’re limited to specific objects, but then your software is useless for general tasks.
As the roboticists noted, their system, with its ability to identify parts of an object rather than just a single object, is better suited to specific tasks, such as “grasp the racquet by the handle,” than Amazon Robotics Challenge robots, which identify whole objects by segmenting an image.
This work is small-scale at present. It has been tested with a few classes of objects, including shoes, hats, and mugs. Yet the use of these dense object nets as a way for robots to represent and manipulate new objects may well be another step towards the ultimate goal of generalized automation: a robot capable of performing every task a person can. If that point is reached, the question that will remain is how to cope with being obsolete.
Image Credit: Tom Buehler/CSAIL Continue reading
Posted in Human Robots
#433486 This AI Predicts Obesity ...
A research team at the University of Washington has trained an artificial intelligence system to spot obesity—all the way from space. The system used a convolutional neural network (CNN) to analyze 150,000 satellite images and look for correlations between the physical makeup of a neighborhood and the prevalence of obesity.
The team’s results, presented in JAMA Network Open, showed that features of a given neighborhood could explain close to two-thirds (64.8 percent) of the variance in obesity. Researchers found that analyzing satellite data could help increase understanding of the link between peoples’ environment and obesity prevalence. The next step would be to make corresponding structural changes in the way neighborhoods are built to encourage physical activity and better health.
Training AI to Spot Obesity
Convolutional neural networks (CNNs) are particularly adept at image analysis, object recognition, and identifying special hierarchies in large datasets.
Prior to analyzing 150,000 high-resolution satellite images of Bellevue, Seattle, Tacoma, Los Angeles, Memphis, and San Antonio, the researchers trained the CNN on 1.2 million images from the ImageNet database. The categorizations were correlated with obesity prevalence estimates for the six urban areas from census tracts gathered by the 500 Cities project.
The system was able to identify the presence of certain features that increased likelihood of obesity in a given area. Some of these features included tightly–packed houses, being close to roadways, and living in neighborhoods with a lack of greenery.
Visualization of features identified by the convolutional neural network (CNN) model. The images on the left column are satellite images taken from Google Static Maps API (application programming interface). Images in the middle and right columns are activation maps taken from the second convolutional layer of VGG-CNN-F network after forward pass of the respective satellite images through the network. From Google Static Maps API, DigitalGlobe, US Geological Survey (accessed July 2017). Credit: JAMA Network Open
Your Surroundings Are Key
In their discussion of the findings, the researchers stressed that there are limitations to the conclusions that can be drawn from the AI’s results. For example, socio-economic factors like income likely play a major role for obesity prevalence in a given geographic area.
However, the study concluded that the AI-powered analysis showed the prevalence of specific man-made features in neighborhoods consistently correlating with obesity prevalence and not necessarily correlating with socioeconomic status.
The system’s success rates varied between studied cities, with Memphis being the highest (73.3 percent) and Seattle being the lowest (55.8 percent).
AI Takes To the Sky
Around a third of the US population is categorized as obese. Obesity is linked to a number of health-related issues, and the AI-generated results could potentially help improve city planning and better target campaigns to limit obesity.
The study is one of the latest of a growing list that uses AI to analyze images and extrapolate insights.
A team at Stanford University has used a CNN to predict poverty via satellite imagery, assisting governments and NGOs to better target their efforts. A combination of the public Automatic Identification System for shipping, satellite imagery, and Google’s AI has proven able to identify illegal fishing activity. Researchers have even been able to use AI and Google Street View to predict what party a given city will vote for, based on what cars are parked on the streets.
In each case, the AI systems have been able to look at volumes of data about our world and surroundings that are beyond the capabilities of humans and extrapolate new insights. If one were to moralize about the good and bad sides of AI (new opportunities vs. potential job losses, for example) it could seem that it comes down to what we ask AI systems to look at—and what questions we ask of them.
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Posted in Human Robots
#433288 The New AI Tech Turning Heads in Video ...
A new technique using artificial intelligence to manipulate video content gives new meaning to the expression “talking head.”
An international team of researchers showcased the latest advancement in synthesizing facial expressions—including mouth, eyes, eyebrows, and even head position—in video at this month’s 2018 SIGGRAPH, a conference on innovations in computer graphics, animation, virtual reality, and other forms of digital wizardry.
The project is called Deep Video Portraits. It relies on a type of AI called generative adversarial networks (GANs) to modify a “target” actor based on the facial and head movement of a “source” actor. As the name implies, GANs pit two opposing neural networks against one another to create a realistic talking head, right down to the sneer or raised eyebrow.
In this case, the adversaries are actually working together: One neural network generates content, while the other rejects or approves each effort. The back-and-forth interplay between the two eventually produces a realistic result that can easily fool the human eye, including reproducing a static scene behind the head as it bobs back and forth.
The researchers say the technique can be used by the film industry for a variety of purposes, from editing facial expressions of actors for matching dubbed voices to repositioning an actor’s head in post-production. AI can not only produce highly realistic results, but much quicker ones compared to the manual processes used today, according to the researchers. You can read the full paper of their work here.
“Deep Video Portraits shows how such a visual effect could be created with less effort in the future,” said Christian Richardt, from the University of Bath’s motion capture research center CAMERA, in a press release. “With our approach, even the positioning of an actor’s head and their facial expression could be easily edited to change camera angles or subtly change the framing of a scene to tell the story better.”
AI Tech Different Than So-Called “Deepfakes”
The work is far from the first to employ AI to manipulate video and audio. At last year’s SIGGRAPH conference, researchers from the University of Washington showcased their work using algorithms that inserted audio recordings from a person in one instance into a separate video of the same person in a different context.
In this case, they “faked” a video using a speech from former President Barack Obama addressing a mass shooting incident during his presidency. The AI-doctored video injects the audio into an unrelated video of the president while also blending the facial and mouth movements, creating a pretty credible job of lip synching.
A previous paper by many of the same scientists on the Deep Video Portraits project detailed how they were first able to manipulate a video in real time of a talking head (in this case, actor and former California governor Arnold Schwarzenegger). The Face2Face system pulled off this bit of digital trickery using a depth-sensing camera that tracked the facial expressions of an Asian female source actor.
A less sophisticated method of swapping faces using a machine learning software dubbed FakeApp emerged earlier this year. Predictably, the tech—requiring numerous photos of the source actor in order to train the neural network—was used for more juvenile pursuits, such as injecting a person’s face onto a porn star.
The application gave rise to the term “deepfakes,” which is now used somewhat ubiquitously to describe all such instances of AI-manipulated video—much to the chagrin of some of the researchers involved in more legitimate uses.
Fighting AI-Created Video Forgeries
However, the researchers are keenly aware that their work—intended for benign uses such as in the film industry or even to correct gaze and head positions for more natural interactions through video teleconferencing—could be used for nefarious purposes. Fake news is the most obvious concern.
“With ever-improving video editing technology, we must also start being more critical about the video content we consume every day, especially if there is no proof of origin,” said Michael Zollhöfer, a visiting assistant professor at Stanford University and member of the Deep Video Portraits team, in the press release.
Toward that end, the research team is training the same adversarial neural networks to spot video forgeries. They also strongly recommend that developers clearly watermark videos that are edited through AI or otherwise, and denote clearly what part and element of the scene was modified.
To catch less ethical users, the US Department of Defense, through the Defense Advanced Research Projects Agency (DARPA), is supporting a program called Media Forensics. This latest DARPA challenge enlists researchers to develop technologies to automatically assess the integrity of an image or video, as part of an end-to-end media forensics platform.
The DARPA official in charge of the program, Matthew Turek, did tell MIT Technology Review that so far the program has “discovered subtle cues in current GAN-manipulated images and videos that allow us to detect the presence of alterations.” In one reported example, researchers have targeted eyes, which rarely blink in the case of “deepfakes” like those created by FakeApp, because the AI is trained on still pictures. That method would seem to be less effective to spot the sort of forgeries created by Deep Video Portraits, which appears to flawlessly match the entire facial and head movements between the source and target actors.
“We believe that the field of digital forensics should and will receive a lot more attention in the future to develop approaches that can automatically prove the authenticity of a video clip,” Zollhöfer said. “This will lead to ever-better approaches that can spot such modifications even if we humans might not be able to spot them with our own eyes.
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Posted in Human Robots