Tapp CommerceSami Leino, Director of Business Development
Accelerated FinanceFrom linear to exponential thinking
Photo: Don McCullough Creative Commons Flickr
Creating faster and more accurate results with accelerated processes.
Exponential Progress
Exponential growth factor
Unexpected results
Expected results
x10
x1000000
Kodak invented CCD technology in 1970’s, too steeped in tradition for change.
1998 Kodak had 170.000 employees, in 2012 filed for bankruptcy.
Business model disappeared in 36 months after 124 years of operation.
Kodak had unwillingness to change, from chemical to electronics company.
Faster Disruption
Digital movement decimated print photos.
Disruption right there!
Apple and Kodak camera in 1994.
Evolution of camera component from $100k to $5.
Source:Wikipedia,PeterDimandis
“40% of Fortune Top500 companies will disappear in a decade.”John Chambers, CEO, Cisco
“50% of jobs in developed countries will be replaced by automation”
Humans are needed to create and operate robotic systems.
AutomationSource:spectrum.ieee.org ExponentialFinance2016
Growth creates complexity and complexity is the killer of growth.
Growth and Complexity
Pre-Industrial Age Industrial Age Post-Industrial Age
“Individual productivity” “Economies of Scale” “Complexity”
Cost
Volume
Cost
Volume
Cost
Volume
Fixed costs Variable costs Complexity costs
Source:WilsonPerumal Company
Law of Accelerated Returns
Processor capacity increased 3000x times in a decade.
1956 2005 2016
Cost of computing decreased x 90k
Exponential growth in computing
Source:D-Wave,Wikipedia,ExponentialFinance2016,publicdomainpictures.net
We are nearing end of Moore’s law.
Size of transistors are reaching physical limits.Transistor per $ has peaked.
End of Moore’s Law
Transistor size
Transistor per $
2000 20122016
2016
Design rule nm
Transistor size
Source:Wikipedia,ExponentialFinance2016http://www.telegraph.co.uk/technology/2016/
Paradigm Shift-Rate
relay
Vacuum tube
Transistors
Integrated circuits
Overall rate of technology development doubles every decade.
1900 1920 1940 1960 1980 2000 2020 2040
Ray Kurzweil - 2001
Three-dimensional(3-D)integrationNanophotonic CommunicationWirelessInterconnectsQuantumComputing
Source:Columbia UniversityNetworks-on-Chip inEmergingInterconnectParadigms:AdvantagesandChallenges
Blockchain
Transaction database & protocol to build, relay and execute financial transactions based on calculated certainty of parties.
Blockchain defies financial institutions steeped in tradition. (Kodak’s unwillingness to change)
• Based on peer-to-peer relationships.• Redefined trust between institutions is based on certainty.• Permanent record storage with never-ending historical tail.• Bitcoin uses transaction chain based on Blockchain.
Exponential Technologies
Financial Productivity - AIArtificial Intelligence, what do we get?Human + pre-reasoned alternatives = Best-of-breed selections
Source:Exponential finance2016
Highperformance
Non biased decisions
Fast operational velocity
No reorganizing departments
24 x 7 operations
No sick leave and whining!
Cutter Room Floor 95/5Deep learning technologies meet AI
• Leverage constant knowledge building.
• Cut 95% of results, refine the 5%, constant recurring results.
• Understand, agree and activate policies for security, liability and ethics.
Focusontop 5%
Constantrefining
Scrap 95%ofresults
Source:Exponential finance2015
Human-in-the-LoopAI guided crowdsourced workflow.
• Tedious tasks are AI controlled.
• AI confidence factor under scrutiny.
• Crowdsourced humans guide AI.
• AI long term independence from crowd-guidance.
Newworkassignment
AIcontrolledprocess
Confidencecalculation
Crowdsourcedguidance
AIcalibration
Source:PeterDimandisblog
House of CatAI functions with unlimited greed, without controlling fear.
Networked drivers are the mice, in the house of cat, today.
• Driver performance under scrutiny.• If a driver starts to drive differently, heading
towards home, AI delivers more profitable rides.
• “Orwellian control, slave to system” -Drivers.
Source:http://www.latimes.com/business/technology/la-fi-tn-uber-arbitration-opt-out-20151211-story.htmlElonmusk
AccelerationBreaking
G-forces
VelocityStyle
Start of day End of tour
Going home
Performance
Rides per hour Trend
Revenues
Days
Hours
Going home? There are new rides for you!
Orientation“Humans may become a mouse in house of a cat?”
Elon Musk
Deep Mind 2015Deep Mind playing Breakout
Experience Level TacticAfter 10min very novice learning gameAfter 30min human level paddle towards ballAfter 60min talented amateur hit rate 80%After 90min professional hit rate 100%After 120min expert level outruns gameAfter 240min creative moves beats the game
From zero to 90min AI outran a human.https://www.youtube.com/watch?v=V1eYniJ0Rnk
Source:TheNewYorkerFeb25,2015,YouTubeMar7,2015.
Challenges – MarketsThe markets are the only real-time real-life lab available.
Source: Networks-on-Chip inEmergingInterconnectParadigms:AdvantagesandChallenges,ExponentialFinance2016
Not possible to repeat theories, for identical environment comparison. Missing comparison value.
Linear thinking and models are about old math.Need for Bayesian models to meet deep learning.
Testing theorems require extensive computing power.No credible way to test sampled models.
Photo:PatrickFinnegan,CreativeCommons
Photo:Silveira Neto,CreativeCommonsPhoto:Thenails Flickr,CreativeCommons
Financial Productivity - Challenges“Most claimed research findings in financial economics are likely false” Prof. Cambell Harvey - President of American Finance Association
Source:Exponential finance2016Americanfinance association,Wikipedia
Heavy machinery needed to solve near real-time market problems.
• Dynamic portfolio analysis
• Scenario analysis
• Derivative pricing
• Real-time stochastic systems
New York Stock Exchange 1908, Wikipedia
1910’s millions of dollars per day
2010’s trillions of dollars per day
Solution – DC to QCFrom Digital Computing to Quantum Computing
Deterministic Computing (DC) cannot simulate probabilistic systems.
Probabilistic systems reflect to real-time markets.
Quantum Computing (QC) can solve this task.
Source:Exponential finance2016
Photo:DWAVEQuantumComputer
Quantum ComputingResearch studies of algorithms and systems related to quantum phenomena.
Based on qubits – holding linear superposition of states.
1:1 0:1 1:0 0:0
• Linear superposition – Simultaneous studying of feasibility. 2 to power of n
• Entanglement and tunneling, physical solutions to mathematical problems.
• Idea is to output all results in one go.• Solutions for instant (de)cryptology.
Source:Youtube: ArtificialIntelligenceandMachineConciousnessresearch.googleblog.com/2016/06/ Exponentialfinance 2016
“Full harvest in one go”
Photo:PhilHendley,2006CreativeCommons,Flickr
Superforcasting is a systematic model to extract essential signals from information masses: based on intuition, probability and likelihoods of events.
• Foresight is a measurable skill that you can cultivate.
• We’re moving from predictive to prescriptive financial services.
• Self-learning forecasts will assist us in decision-making.
Superforecasters
PhilosophyCautiousNothing is certain.
HumbleReality is indefinitely complex.
Non-deterministicEvents are not meant to be.
Superforecasting - Style
Open-mindedTesthypothesis
openly
CuriousNeedforcognition
Self-criticalReflectivethinking
NumerateComfortablewith
numbers
ThinkingStyle
Source:HBR, USFinanceNews
Identify
Capture
AnalyzeCut95%
Calibration
What to look for? Essential to find weak signals.Identify -> Capture -> Analyze Signals favor or threat your business.
24/7enhancement
Methods can consist of one or many tools.
Superforecasting - Methods
SynthesizingBlend models with
your own
AnalyticalConsider adversary
views
PragmaticRational modelling Not fixed to agenda
Probability focusedLikelihood based, not
1 or 0
Thoughtful Accept fact change =
change of mind
IntuitiveEnjoy cognitive
challenges
Source:HBR, USFinanceNews
Motivation, Grit + Ethics = Commitment to precision
Superforcasting - Focus
Passion drivenInternal flame
PersonalityI will get better
TenaciousAs long as it takes
Dedicated mindFocus
ImprovementInternal metrics
Growth mindsetConstant betterment
Source:HBR, USFinanceNews
Precision
Germ.
Societies Cards Game changers
Game Changers
Tipping pointU.S. 45%
Australia 35%Germany 33%
CashlessSingapore 61%
Netherlands 60%Sweden 59%
InceptionIndonesia 15%
Greece 2%Peru 1%
8 million Indonesians own credit cards. Reuters May 29th 2016
Debit Cards Per Head
Credit Cards Per Head
3.28
1.75
1.48
1.25
0.94
China
Aus.
UK
Germ.US
2.9
1
0.880.33
0.06
US
Aus.
UK
China
Source:ECB,Reuters,JupiterResearch
Ind. 0.02Universal database protocolfor financial transactions.
Microloans for entrepreneurs in emerging countries.
Users are rated and graded by Facebook relationships.
Inclusion of wealth into GDP. Satisfied citizens, stability to society.
Cash inclusion
Community ratings
Real-Time microfinance
Blockchain
Cash Society
5B people live in cash society. Full impact of informal economy is not reflected in global GDP.
These people live in a daily economy, visibility is to sunset.
Inclusion to online economy evens inequality, reduces instabilityand increases the proportion of satisfied people in economy.
Access to goods and services
Wealth contributes to GDP
Increased overall stability in society
Source:TappCommerce
Cash vs. non Cash
non CashCash
52%48%
34%66%
9%
7%93%
2%98%
35%65%
North America
Western Europe Eastern Europe
Latin America
Asia (developed)
Asia-Pacific (emerging)
91%1%99%
Africa
Source:McKinsey&GapGemini
Game changers are people themselves.Cash inclusion, community based ratings, instant lending, lag-free cash transfers,
are disruptive finance - real-time and in global scale.
Technology assists us in decision-making, but we make the final pick.
Who Makes The Final Pick?
“Computers need to learn how to understand the world like a human.”Bart Selman, computer scientist, Cornell University
https://www.youtube.com/watch?v=6zpuHr7t8xI
“Thanks for Petteri for proofing.”