AI & Quantum Computing for Finance & Insurance

Fortunes and Challenges for China and America

Paul Schulte, David Kuo Chuen Lee

• Publisher: WSPC
• Year: 2019
• ISBN:
  9789811203916
• Topic: Business
• Subtopic: Finance
• Index: Business

This book offers a framework and analysis for the current technological landscape between the United States and China across the financial and insurance sectors as well as emerging technologies such as AI, Blockchain, Cloud and Data Analytics and Quantum Computing (ABCDQ). Based on original lecture slides used by the authors, the book presents contemporary and critical views of emergent technologies for a wide spectrum of readers from CEOs to university lecturers to students. The narrative aims to help readers upgrade their technology literacy and to overcome the fear of AI posed by our lizard brain.

Contents:

• Acknowledgments
• Introduction
• How to Escape the Corporate Lizard Brain: The True Role of AI:
  • Purpose of AI: Naming and Shaming the Corporate Lizard Brain — One Meeting at a Time
  • Case Study: US vs PRC in the Banking Lizard Brain Shift to AI FinTech Machines
• Banking and Insurance Transformation in the US, China, and Southeast Asia:
  • How the Mighty are Learning to Change: Who is Evolving and Who is Dying
  • New Entrants and Traditional Banks are (Finally) Trading in Lizard Brains for an Upgrade
  • Banking on the Transformation of Blockchain
  • Blockchain Disrupts Http and SWIFT
• Global Leadership in the Transformation with AI and Banking/Insurance:
  • Alibaba vs Tencent: The Great Race
  • Ping An: Blazing New Trails and Connecting the Dots
  • Huawei and the Global Landscape in 5G and Cloud
  • India: Walmart, Amazon, Alibaba, and Tencent in India: WHAT the Hell is Going On?
• How New Technologies Will Revolutionize the Infinity of Digital Signals Out There:
  • Quantum Computing: It is Around the Corner — Get Ready!
  • Cloud Wars: Alicloud vs AWS and Azure (and What Huawei Wants to Do About It)
  • Insurtech: Digitizing Head, Health, Hands and Heart
• Singapore Back in the Game When the Titans Clash: Will It be SMART Enough?:
  • Singapore: An Outsider and Smart Nation Back in the Game!
• Appendices:
  • Alibaba
  • Ping An
  • Tencent
  • Baidu
  • Zhong An
  • Softbank
  • Amazon AI
  • Google
  • Apple
  • Facebook
  • Microsoft AI

Readership: Undergraduate and graduate students, professionals working in financial institutions and those interested in financial technology worldwide.Financial;Lizard Brain;AI;USA;China;Banking;Insurance;Cloud;Quantum Computing;Insurtech;FinTech;Blockchain;Data Analytic;Singapore;Technology;Alibaba;Ping An;Tencent;Baidu;Zhong An;Softbank;Amazon;Google;Apple;Facebook;Microsoft0 Key Features:

• No competing title that provides an in-depth and critical exposition of the emergence technology environment and its challenges and opportunities
• Provides an exposition and framework for anyone who is interested in the technology environment
• Presents concepts of deep emerging technologies and new disruptive business models, accessible to the general public

PART 1

How to Escape the Corporate Lizard Brain: The True Role of AI

Chapter 1

Purpose of AI: Naming and Shaming the Corporate Lizard Brain — One Meeting at a Time

1.1How Us Frail Humans Can Make Peace with AI

There is a part of the brain known as the limbic cortex that neuroanatomists have attributed as the seat of emotion, addiction, mood and lots of other metal and emotional processes. Amygdala, the part of the limbic system that is responsible for primitive survival instincts such as fear and aggression, is also called “The Lizard Brain” or “The Reptilian Brain”. This is because the limbic system is about all a lizard has for brain function¹ (see Figure 1.1).

The lizard brain is the reason you’re afraid, the reason you don’t do all the art you can, the reason you don’t ship when you can. The lizard brain is the source of the resistance.

The lizard brain is hungry, scared, angry, and horny.

The lizard brain only wants to eat and be safe.

The lizard brain cares what everyone else thinks, because status in the tribe is essential to its survival.

— Seth Godin²

Figure 1.1:How us frail humans can make peace with AI: Ditch the lizard brain and embrace algorithms.

In Barbara Tuchman’s 1961 book titled, The Guns of August, the best sentence in summarising the failure to plan for a long World War I among other wrong moves was as follows:

“The disposition of everyone on all sides was not to prepare for the harder alternative, not to act upon what they suspected to be true.”³

She has also identified a historical phenomenon which she terms “Tuchman’s law”, which has become known as a psychological principle of “perceptual readiness” or subjective probability”⁴:

Disaster is rarely as pervasive as it seems from recorded accounts. The fact of being on the record makes it appear continuous and ubiquitous whereas it is more likely to have been sporadic both in time and place. Besides, persistence of the normal is usually greater than the effect of the disturbance, as we know from our own times. After absorbing the news of today, one expects to face a world consisting entirely of strikes, crimes, power failures, broken water mains, stalled trains, school shutdowns, muggers, drug addicts, neo-Nazis, and rapists. The fact is that one can come home in the evening — on a lucky day — without having encountered more than one or two of these phenomena. This has led me to formulate Tuchman’s Law, as follows: “The fact of being reported multiplies the apparent extent of any deplorable development by five- to tenfold” (or any figure the reader would care to supply).

— Barbara W. Tuchman⁵

In other words, sensational and exaggerated events are what people like to read, and therefore events are depicted as general and pervasive. Negative aspects of things are often played up in history and news while chroniclers tend to forget the positive aspects of crucial events. For example, the failures of startups are a blast over the media while the successes of the impactful few are rarely reported or chronicled in small print.

Psychologists have also studied many similar cognitive bias situations, such as groupthink,⁶ fear of authority, lack of imagination and hyper-rational (Figure 1.2). The term “groupthink” was first mentioned by William Whyte,⁷ and later Irving Janis⁸ developed the theory of groupthink to describe the faulty decision-making that can occur in groups as a result of forces that bring a group together. Mental health professions consider the severe fear of authority as a form of social phobia. Albert Einstein once said that the unthinking respect for authority is the greatest enemy of truth.

A failure of imagination is when something seems obvious to those in the know, predictable (particularly from hindsight) and yet no provision is made for the undesirable outcome. If the individual does not have the ability or refuses to extract the details of previous experiences and assemble them to create an imaginary event, then there is a lack of imagination. Such a lack of constructive-episodic simulation has linkages to old age and the involvement of recalling other types of memory. Hyper-rationality is a defense mechanism against all that is threatening and causes unease. It describes the situations that rationality carried to the extreme and beyond rational limits.

On the other spectrum, Artificial Intelligence (AI) represents a different view of independence, logical, transparent, ever-changing, relentless, and emotionless. With carefully designed self-learning and AI tools, a variety and complete set of methodologies minimize or overcome cognitive biases when applied to real-world situations.

Figure 1.2:Cognitive bias: I MUST BELONG. I can’t fail. Polite is good. Boss knows better. Yesterday predicts tomorrow. Data confirm my view.

Technology can do good and also do harm depending on ethical standards driven by people. AI has a good chance of being a foundation for technology to overcome human frailty if governed by ethical rules and regulations.

Figure 1.3:Foundation for human frailty: Immediate desire creates perception — desire for $, pleasing, pleasure, pals, perspective, predictability.

Different types of biases (see Figures 1.3–1.5) will lead to different effects but mostly negative. What followed from the four biases is fear of judgement, fear of failure, fear of the unknown and fear of the irrational. This leads to quitting, hiding, procrastinating and freezing — hardly the outcomes that any corporates or individuals are looking towards. This seems to be the most common observation of modern-day management, especially with the emphasis on conflict of interests and fiduciary duties. It is almost a foregone conclusion that without any technical expertise in the board or management, the “right” thing to do is not to do anything. However, AI has much to contribute.

Figure 1.4:Types of bias...

Table of contents

• Cover
• Halftitle
• Title
• Copyright
• Contents
• Acknowledgments
• Introduction
• Part 1: How to Escape the Corporate Lizard Brain: The True Role of AI
• Part 2: Banking and Insurance Transformation in the US, China, and Southeast Asia
• Part 3: Global Leadership in the Transformation with AI and Banking/Insurance
• Part 4: How New Technologies Will Revolutionize the Infinity of Digital Signals Out There
• Part 5: Singapore Back in the Game When the Titans Clash: Will it be SMART Enough?
• Appendix: