Ben Goertzel has the iconoclast-genius look down pat: super skinny frame, a leather vest that might have been hip in the 1980s, heavy-metal locks of hair, and, on the day he sat down with DigFin, a fedora whose spots are somewhere between Holstein cow and Dalmatian dog.
He’s been involved with artificial intelligence for over 30 years. How did he get into A.I. in the first place?
“Probably from watching a lot of Star Trekin 1971,” he said.
A few questions from DigFinabout the history of A.I. made it clear how little your correspondent knows of the topic (despite, if he may, a pretty solid grasp of the original Star Trekseries). But Goertzel doesn’t mind: he lights up when talking about the different categories of the field.
From narrow A.I. to general intelligence
On this day, however, he’s meeting DigFinto talk about fintech. He has just launched a for-profit business called Singularity Studio that is a decentralized marketplace for A.I., and Ping An Insurance is the first big financial institution to announce it will be using the service.
Goertzel is CEO and chief scientist at a research foundation based in Hong Kong called SingularityNET. His business partner, Cassio Pennachin, the foundation’s chief A.I. officer, will serve as CEO of Singularity Studio.
Goertzel’s love is helping advance the field from today’s various “narrow A.I.s” that are good at specific, repetitive tasks, towards “artificial general intelligence”, or AGI, in which computers can learn, reason and imagine beyond the data they are trained on.
(Beyond that is “singularity”, the moment we achieve a super intelligence, in which computers create other computers using code beyond human capacity to design.)
He has been at this for a long time, in the areas of human-like robots at Hong Kong firm Hanson Robotics (built by engineers in Shenzhen), among other ventures.
One way to get there is to enable a multitude of “narrow A.I.” applications to interact, and to get enterprises to draw upon a field of apps beyond their immediate sector or in-house capabilities. SingularityNET has been creating such narrow A.I.s, and now Studio will serve as a means for all kinds of developers, users, and even the A.I.s themselves to interact.
“These A.I.s connect and talk to each other with many other different A.I.s,” he said. Some are highly specific, others are for general learning, but they are combining with each other. “They’re ingesting data from the internet, like it’s a primordial soup that will create new forms of A.I.”
Moreover, Goertzel wants to ensure AGI is available to more than just mega corporations or governments.
“This is not for the research lab,” he said of Studio. “It’s in the real economy, it’s in the internet, it’s impacting us. Many A.I.s have useful functions, like helping doctors, or predicting financial markets, and optimizing supply chains.”
A.I. for all?
But there are legitimate fears that A.I. could also wipe out lots of jobs, or that it’s being exploited by the U.S. and Chinese militaries. Meanwhile the huge tech companies in both countries are hiring or acquiring many A.I. startups, hogging the talent and the data. And these corporations, with government ties, focus most on developing A.I. for advertizing, surveillance and military functions.
“The top three uses are selling, spying and killing,” Goertzel said. “Do we really want a few mega corporations to architect the AGI that will guide our future?”
He decided blockchain technology could be used to support a way to support other forms of enterprise, help smaller or more niche developers sell their wares, and, because it’s decentralized, make A.I. available to far more types of users. Studio is a Dapp (decentralized application) store in which the A.I.s can also outsource to one another and share data.
“This increases the odds that AGI will be controlled by all users and data contributors, and not just a small group of powerbrokers,” he said.
From token to trading
Ping An, though, and the global banks he says are also experimenting on Studio are pretty mega-corporate themselves. For Goertzel, this is firstly a commercial enterprise; secondly, it’s also useful to give oxygen to a broader array of A.I.s, and thereby improve industries from finance to healthcare to agriculture.
This all results from a 2017 initial coin offering whose AGI token raised financing for SingularityNET.
Unlike most ICOs – unregulated fund-raisings for projects backed by a digital token – this one may actually turn out to create a useful business. As more users such as Ping An or banks buy A.I. products on the decentralized marketplace, which they access via the AGI token, the value of the token should increase in line with its utilization.
Benefiting financial institutions
But why should a financial institution care about A.I.s in unrelated fields? Why should developers think they can find new clients via a marketplace like this?
“A.I. is more diverse than people realize,” Goertzel said. “The focus in the media is on A.I. that makes money for big tech companies. This requires a lot of data, so this A.I. creates profits to companies that have the most data. It’s a real thing, but it’s not the only thing.”
For example, his son, a PhD student, is developing A.I. to prove math theorems. Goertzel gets excited about this sort of thing, but it’s not going to make the news. Similarly, he talks about genomics, using A.I. to identify sequences in genetic code that could extend human life; or agriculture, to diagnose plant disease.
But what’s that got to do with finance?
He sites an investment portfolio in emerging-market currencies and commodities. That hedge fund, if it incorporates A.I. designed for agriculture, can use it to spot relevant changes in, say, crop disease, that will have later impact on commodity prices.
Another example: he says some fintech customers are using Studio to hedge real-estate risk; or they are using views on agro-business to find assets to use as hedges against real-estate exposures.
But is this just a more complicated black box, one that develops trading strategies that work – until they don’t?
“No one can deal with regime changes,” he said. “We haven’t solved this, otherwise I’d be a quadrillionnaire. But we have a novel framework for regime changes, global risk assessment, and crash predictions.”
Given the deepening complexity and connectivity of global financial markets, Goertzel argues that the number of things impacting financial instruments is too great for a human to master. “If you get more A.I.s talking to each other, you get more inputs to products and risk assessment.” That extends to credit scores and insurance.
Ping An’s use cases
It’s not just about diverse fields: it’s also about combining different styles of artificial intelligence. For example, Ping An has a strong in-house capability around neural nets.
Some of the A.I. programs that Goertzel has developed are based on cognitive science, while other people are better at A.I. in evolutionary computation, probabilistic methods, or fuzzy systems.
Ping An, therefore, can leverage Studio to access A.I.s that it can’t build internally. Its computer vision team can use these to augment their work on OCR (optical character recognition) to better identify Chinese characters in photographs; or to build facial-recognition models. The financial group is also interested in A.I. to get a better grasp of its data, while the biomedical team can use new A.I. algos for specific projects, including deploying them on Studio to interact with other A.I.s in the marketplace.
For now, users need the AGI token to pay for services on Studio, which is an Ethereum-based coin. Studio is working to integrate a fiat-to-crypto gateway so that enterprises can use it without needing to get into the token world. “We need payments for mass adoption,” Goertzel said.
Operating in China
Secondly, the firm has had to build a separate infrastructure for mainland China developers or users. Studio went live on its mainnet last month, but it can’t use the AGI token in China, where the authorities don’t want it to be used for people to swap out into dollars. Therefore Singularity Studio is working on a token that only converts in and out of renminbi.
Both sites will contain the same algorithms for sale. But from there, things could diverge, particularly given today’s U.S.-China tensions, particularly over data and technology.
Goertzel, an American operating a Hong Kong-based business with mainland Chinese customers, accepts these political tensions as just “part of life”, he said. There are no borders for core A.I. algorithms, which are all published in the same journals and are built using open-sourced code. It’s the data sets that are being walled off.
However, Goertzel says it’s a mistake to think of this is purely China versus America terms: “U.S. versus China is a misdirection.” It’s also a tussle between big tech companies hogging data at the expense of smaller ones, or the rest of the world trying to compete with American or Chinese tech.
Goertzel hopes by decentralizing access to at least the algorithms, A.I. won’t benefit only those two countries’ internet giants – even if one of them is his first publicly announced commercial client.
Cloud, A.I. and new possibilities for finance
Incumbents are starting to get the hang of this fintech thing.
For many financial institutions – the incumbents – the tech wave has often seemed overwhelming. And the pace of breadth of change is unprecedented. But banks, asset managers, brokers and, insurance companies are increasingly finding opportunities.
New business models are creating new opportunities to massively expand the pie, with cloud computing among the most vital of these foundational technologies. Here is a sample of some of the most interesting updates DigFin caught during Day Three at the Singapore Fintech Festival.
Wholesale markets going digital
Kate Birchall, head of Asia Pacific at clearinghouse LCH, says technology is now taking over from regulation as the main driver of change in interbank markets for derivatives and finance. Post-2008 financial crisis, banks have been consumed with new regulation, but now they are implementing new technology to comply more efficiently. “Banks keep cutting costs in processing and in reconciling trades. Tech is now at the forefront of trading at the institutional level much more cost-effectively.”
Kelvin Tan, head of innovation for treasury and markets at DBS Bank, said, “One of the least value-added activities banks do today is reconciliation.” Right now the focus is on deploying artificial intelligence to improve the situation. Over the longer term, institutions may adopt blockchain to eliminate reconciliation altogether, or at least standardize processes to make them manageable.
More technology companies such as SmartStream Technologies are providing services to help financial institutions grapple with the challenges of reconciliation.
SmartStream offers its TLM OnDemand, the market-leading functionality of its TLM solutions through secure, resilient, cost-effective and fully managed web-based services. “TLM allows middle and back offices to process transactions,” said Haytham Kaddoura, SmartStream’s CEO. “Clients gain a lower total cost of ownership for their operations, while at the same time improving risk control throughout the transaction lifecycle.”
BNP taps IBM for hybrid cloud
Bernard Gavgani, group chief information officer at BNP Paribas, says the bank is working with IBM to find a path to migrate what it can to the could while also continuing its legacy systems work. “My challenge is running legacy system with cloud, securely,” he said.
Migrating to cloud is not as cheap as advertized for banks that need to keep using their mainframe servers; instead it’s an added cost. And having some data computed on prem and other data with a vendor can leave banks exposed to attack, as happened earlier this year to Capital One. So in summer 2020, BNP Paribas will go live with part of its data on IBM’s public cloud but with the servers on the bank’s premises. So the bank benefits from having a big tech vendor, as it continuously upgrades its cloud security and service, while also keeping client data protected internally.
Mark Johnston, head of security and networking specialists in APAC at Google Cloud, says financial institutions are becoming savvier users. “The industry is moving beyond cloud as ‘infrastructure as a service’ to a ‘platform as a service’,” he said.
For example, one institution is using Google Cloud computing to reduce calculating daily liquidity positions from eight hours to 30 minutes. If more banks follow suit, it creates a seachange in how they can manage their liquidity risk as well as report it to regulators, especially once they add data analytics on top.
Alan Jones, business solutions director at SmartStream Technologies, says as banks continue to embrace cloud computing, it brings down the costs of difficult manual work such as corporate actions processing.
Standards, standards, standards
As banks and fintechs innovate, they are creating new complexities. Competition is good for the end user but it also creates so many platforms, protocols and networks that innovation can be at risk if the industry doesn’t develop standards for interoperability and benchmarking.
“Collaboration requires open, interoperable standards, with so many new players in the payments industry,” said Chris Clark, regional president at Visa.
Johan Toll, head of digital assets at Nasdaq, noted his company delivers its technology to over a hundred markets. “How to increase interoperability among them?” he asked. Two solutions: moving more services and data into the cloud, and using A.I. to improve how firms view and analyze that data.
David Hudson, J.P Morgan’s global co-head of digital and platform strategies, said adopting such technologies aren’t really about cost savings, but to enable big institutions to be agile and to drive standardization. “There’s always a ‘new something’ so our ability to move fast with the times is essential,” he said.
MAS works with industry for AI rules
Monetary Authority of Singapore is developing a framework with financial institutions for promoting responsible adoption of artificial intelligence and data analytics.
The framework is called Veritas, and will let banks, asset managers, insurers and others benchmark their AI and data solutions against MAS’s principles of fairness, ethics, accountability, and transparency. That in turn will drive trust in big data and A.I.-driven solutions.
Digital payments to the fore in Singapore
Google Pay, NETS, SmartStream and MasterCard announce new efforts at Singapore Fintech Festival.
One of the biggest themes at the Singapore Fintech Festival is digital payments. It’s a field full of innovation from fintechs, Big Tech, and lenders. DigFin presents some of the biggest announcements.
ATM for rides
NETS Group runs Singapore’s payment rails. The company has a track record of innovating: it was the first in Asia to adopt an electronic debit network, even while global payment companies like Visa and Mastercard still relied on franking. (Franking is referring to postal stamps to confirm a payment was sent by mail.) Other “firsts” followed.
Today the company is now helping Singaporeans use their bank debit and credit cards to pay for transportation, says Jeffrey Goh, group CEO. It has just introduced NetsClick, the first ATM card tokenized for taxi rides, with the user’s bank account debited for the journey. And it just followed this up with allowing bank customers to use contactless ATM cards to pay for rides on the city’s MRT subway system.
OCBC partners with Google
OCBC Bank has entered a partnership with Google to reintroduce the Google Pay app to Singapore. Starting in January 2020, OCBC customers will be able to make C2C or C2B transfers between mobile phones using Google Pay.
Bank customers won’t need an electronic wallet to make mobile payments, says Ching Wei Hong, the bank’s COO. The bank is using the partnership to boost users of Singapore’s new PayNow digital payments network.
Users of Google Pay can also earn rewards when they use it for transferring money or making payments, which go directly to the user’s OCBC bank account.
Google Pay offers a similar feature in India, where it gained rapid adoption on the back of India’s interbank payments system, United Payments Interface (UPI). PayNow, which went live in Singapore in 2017, is a similar peer-to-peer transfer service. The Association of Banks in Singapore estimates the first half of 2019 saw 28 million PayNow transactions worth S$4.6 billion. With Google Pay now supporting PayNow-based payments, the company expects volumes to grow rapidly.
Adding A.I. to payments
SmartStream Technologies is developing artificial intelligence solutions to improve banks’ digital payments capabilities, says Andreas Burner, chief innovation officer.
The technology company is applying machine learning and neural networks to identifying patterns in the data that banks already possess. Banks hold the lion’s share of customer data, and SmartStream is helping them access it and make sense of it.
Digital payments solutions enable acquirers, card networks, issuers, gateways, ISOs and others to get a holistic view of their payments. “Our innovation lab is working with banks to understand how to apply machine-learning tools to payments innovations,” Burner said. “Volume, velocity and variation in digital payments is changing at an unprecedented rate.”
The company has established a dedicated practice to collaborate with all participants in a client’s digital payments world, creating innovation solutions to bridge the gaps in the areas that matter to end users – and to build models that can handle exceptions workflows that kick in when a payment fails or doesn’t go as planned.
All aboard the express
Mastercard has launched Fintech Express, a program to work with third-party fintechs to support them as they help grow the digital payments world, says Rama Sridhar, executive vice president for regional digital partnerships and new payment flows. Mastercard’s first partner is Rapyd, a fintech that uses APIs to provide customized payment solutions to regional and global e-commerce companies, among other corporations.
The partnership gives Rapyd access to Mastercard’s product, partnerships, licensing and legal teams, and helps Mastercard service Rapyd’s corporate clientele. This gives the fintech fast licensing as a card issuer, integration into the Mastercard network, and advice. Rapyd will be able to quickly issue cards for its corporate clients in Asia Pacific. Mastercard hopes its Fintech Express platform will attract more payment-oriented fintechs.
MAS: make fintech sustainable
Data localization, reconciliation and open APIs leading themes at Singapore Fintech Festival’s first day.
The Monetary Authority of Singapore uses its humungous Singapore Fintech Festival (SFF) to drive the government’s agenda. And because of Singapore’s pole position in the industry, and the scale of its conference extravaganza, the MAS can use the event to shape its message.
And its message this year is sustainability. “We need to make the world greener,” said MAS managing director Ravi Menon. And that means a greener financial system, he said.
Data governance doubts
While Singapore’s government pushed green fintech, bank CEOs expressed concern about data and how it’s being regulated in some countries. Noel Quinn, CEO at HSBC, said local laws requiring customer data to remain within the country put at risk the global services that financial institutions are trying to create to serve financial inclusion goals.
Bill Winters, CEO of Standard Chartered, said storing data in local countries wasn’t a problem, but when the data can’t be transmitted abroad, it undercuts cloud computing and global data analytics.
DBS chief executive Piyush Gupta noted that such barriers obstruct progress in KYC, AML and other security requirements – although he also noted that governments and policymakers in some markets realize their localization laws need to be updated.
Companies used SFF to announce new initiatives. One of the areas that fintech has struggled to reach is reconciliations in payments and securities – a huge goal across the industry because of the intensely manual nature of such work. SmartStream Technologies used the exhibition to promote a new product, SmartStream Air, which uses artificial intelligence to carry out reconciliations in almost real time, by comparing and matching data, highlighting any disputes.
DBS Bank, for example, is using SmartStream products to bolster the digitalization of its institutional and trade-finance business, said Raof Latiff, managing director for the institutional banking group. Streamlining its operational workflows allows DBS to focus on new innovations for its customers.
Open banking options
Another major topic at the event was open banking, and open APIs. The rise of digital banking has given way to a need for open banking, said Francesco Simoneschi, co-founder of London-based fintech TrueLayer, which provides verification tools. Banks will begin to use APIs to communicate with other players in order to be able to verify customer identities, rather than rely on people providing bank statements – particularly in developing markets.
“Digital identity is the holy grail,” said Michael Tang, leader of global financial digital services at Deloitte. But financial institutions engaging in open banking will need to ensure trust, which requires a business model that values the customer, instead of seeking to take advantage of their data.