Episode Transcript
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Speaker 1 (00:00):
I gotta say, these articles on AI and finance you
send over, well, they've really got me thinking. Yeah, yeah,
I mean robo Advisor's algorithms predicting market crashes. It's like
we're living in the future.
Speaker 2 (00:11):
It is a bit isness totally.
Speaker 1 (00:13):
So where do we even start with all this? What's
the real deal beyond the hype?
Speaker 2 (00:18):
Well, it's definitely not all just hype. AI is really
fundamentally changing finance. I think the key is, you know,
you got to look past the buzzwords and see how
this tech is actually being used.
Speaker 1 (00:29):
Okay, makes sense, So let's break it down a bit.
One thing that keeps popping up in these articles is
risk management. Some even say that AI can handle financial
risks better than humans. Is that even possible?
Speaker 2 (00:40):
I wouldn't say it's about replacing, you know, replacing human
judgment completely, but it's more like giving us, you know,
like better tools, right.
Speaker 1 (00:47):
Yeah.
Speaker 2 (00:47):
Like imagine imagine a bank using a machine learning model,
something called a random force algorithm, oh, to check out
loan applications instead of just a credit score. It can
look at tons of data points, right, social media, online spending,
even even psychometric data.
Speaker 1 (01:04):
Hold on, wait, they're looking at our social media to
decide if we get.
Speaker 2 (01:07):
Alone right to predict the likelihood of someone defaulting.
Speaker 1 (01:10):
It's kind of creepy, isn't it.
Speaker 2 (01:12):
Well, yeah, that's where the ethics of all this come in.
You know, AI is powerful, but we got to use
it fairly and transparently.
Speaker 1 (01:18):
Yeah, for sure. So aside from that, what are we
talking about? What kind of benefits?
Speaker 2 (01:23):
Huge ones potentially. I mean, think about spotting another subprime
mortgage crisis before it happens. AI could be analyzing economic
data and market sentiment in real time and you know,
catch things human analysts might miss.
Speaker 1 (01:39):
Okay, I'm starting to see the potential there. But what
about all this high frequency trading stuff, These algorithms making
millions of trades a second. Isn't that like super risky?
Speaker 2 (01:48):
Could have destabilize things High frequency trading or HFT. Yeah,
it's definitely one of the more controversial uses of AI
and finance. Basically, these algorithms looking for tiny price differences
between exchange and making decisions crazy fast like a microseconds microseconds.
Speaker 1 (02:04):
Wow.
Speaker 2 (02:04):
Yeah, They're using these complex math models and massive data feeds,
and they got to have super fast connections to the.
Speaker 1 (02:11):
Exchanges, so speed is everything here.
Speaker 2 (02:13):
Absolutely. We're talking about firms competing to put their servers,
you know, right next to the exchange servers, just to
shave off nanoseconds of delay.
Speaker 1 (02:21):
Nanoseconds. That's insane. So is all this making the market
better or just more unpredictable?
Speaker 2 (02:27):
That's the million dollar question?
Speaker 1 (02:29):
Literally? Probably?
Speaker 2 (02:30):
Yeah. Probably. The people who like it say that it
makes things more efficient, you know, more liquid, cheaper to trade.
But the critics say it creates instability, you know, like
those flash crashes, and gives an unfair advantage to the
big players.
Speaker 1 (02:46):
So it's a bit of a Wild West situation right now.
Speaker 2 (02:48):
You could say that.
Speaker 1 (02:49):
Okay, So what about the average person? How's AI changing
things for them?
Speaker 2 (02:53):
This is where it gets really interesting. There are so
many new personal finance apps powered by AI. They can
analyze your spending, automate savings, even manage your investments, like
having a personal financial advisor right on your phone.
Speaker 1 (03:06):
Yeah. I've actually been using one of those, the one
that rounds up your purchases and invests the spare change.
Speaker 2 (03:10):
Oh yeah, those are cool.
Speaker 1 (03:12):
Yeah, it's not a ton of money, but it adds up.
I'm curious, though, how do these robo advisors actually work.
Are they really making smart choices?
Speaker 2 (03:19):
Well, they use algorithms based on something called modern portfolio theory.
Speaker 1 (03:24):
Okay.
Speaker 2 (03:25):
It's this framework for you know, optimizing your investments based
on how much risk you're willing to take and what
your goals are. And it won a Nobel prize.
Speaker 1 (03:33):
Wow.
Speaker 2 (03:33):
Okay, Yeah, So these algorithms are always watching the market
and adjusting your portfolio.
Speaker 1 (03:38):
Gotcha. So it's not like a sure thing though, right.
They can't predict everything right exactly.
Speaker 2 (03:42):
They rely on past data and obviously they can't see
things like you know, pandemics coming or sudden crashes.
Speaker 1 (03:49):
Makes sense. It's a tool, not magic.
Speaker 2 (03:51):
That's a good way to put it.
Speaker 1 (03:52):
Okay. So let's talk about the other side of things, fraud.
It feels like every day there's a new story about
a data breach or some crazy scam. Is AI helping
with that at all?
Speaker 2 (04:02):
Definitely? That's where AI's ability to you know, crunch tons
of data and find patterns is really useful. Banks and
credit card companies are using it to track transactions in
real time so they can spot anything suspicious like a
big withdrawal from a weird location or a sudden increase
in spending.
Speaker 1 (04:19):
So it's like having AI detectives on the case twenty
four to seven pretty much.
Speaker 2 (04:23):
And it's way better than those old rule based systems
because it can adapt and learn as new scams pop up.
Speaker 1 (04:29):
That's reassuring. Speaking of keeping things running smoothly, what about
all that back office stuff in finance, all the paperwork
and processes. Can AI help with that too?
Speaker 2 (04:37):
Absolutely? AI is changing how finance operates behind the scenes
big time. Like think about loan applications. Instead of loan
officers going through mountains of documents, AI can analyze credit history, financials,
even things like utility bills, you know, to see if
someone's credit worthy, and way.
Speaker 1 (04:53):
Faster, so it's not just speed. It could potentially make
lending decisions fair too.
Speaker 2 (04:57):
That's a big potential benefit. AI can help help remove
human bias by using the same criteria for everyone. Of Course,
the algorithm itself needs to be designed fairly too, so
it doesn't just repeat the biases that are already out
there in the data.
Speaker 1 (05:10):
It's like any tool, it can be used for good
or bad.
Speaker 2 (05:13):
Yeah, it's all about how we implement it.
Speaker 1 (05:16):
Okay, So before we get into the future of all this,
there's one more area I want to touch on regulations.
The financial world is full of rules and it's getting
harder and harder to keep up right.
Speaker 2 (05:27):
And that's where RegTech comes in, using AI to automate
and streamline all those compliance processes.
Speaker 1 (05:34):
So instead of tons of lawyers and compliance officers, we
have AI algorithms making sure everything's on the up and up.
Speaker 2 (05:40):
Yeah. AI can go through huge amounts of data looking
for patterns that could signal a violation much faster than
we can, so the humans can focus on the really
tricky stuff instead of the routine work.
Speaker 1 (05:51):
So AI is like a superpowered compliance officer, constantly on guard.
Speaker 2 (05:55):
That's a good way to put it. And it's not
just about catching the bad guys. It can also help
companies make sure they're meeting all the requirements from data
privacy to anti money laundering, which protects everyone.
Speaker 1 (06:05):
Well, it's clear that AI is already having a huge
impact on finance, from risk management and investing to fighting
fraud and keeping things compliant. But where do we go
from here? What's next?
Speaker 2 (06:17):
Yeah, good question.
Speaker 1 (06:18):
Let's dive into the future of finance after the break. Okay,
so we've seen how AI is already shaking things up
in finance. But now I'm really curious about what's next.
What's the future hold flying cars and robot financial advisors?
Speaker 2 (06:31):
Huh, well, maybe not flying cars, but yeah, AI is
moving so fast it's tough to say where we'll be
in a few years. One thing that seems to be
a big trend, though, is this idea of hyper personalization.
Speaker 1 (06:42):
Hyper personalization so even more personalized than those robo advisors
we talked about exactly.
Speaker 2 (06:48):
Imagine a world where your financial products and services are
constantly adapting to you, to your situation, your risk collarance,
spending habits, even your life goals. It's a level of
customization we couldn't even dream of a few years ago.
Speaker 1 (06:59):
Okay, now like I'm stuck in the past from a
little budgeting app. How would this hyper personalization actually work?
Speaker 2 (07:05):
Think about all the data we create every day, online activity, purchases,
social media. AI can analyze all of that to build
a really detailed picture of your financial.
Speaker 1 (07:18):
Personality, so like a financial fingerprint, yeah kind of.
Speaker 2 (07:21):
And that lets them create products and services that are
really tailored to you your individual needs.
Speaker 1 (07:26):
So instead of me trying to figure out what's right
for me, AI could just tell me, here are the
perfect options.
Speaker 2 (07:31):
Yeah. Basically, it takes the guesswork out of It makes
everything more intuitive and easy to use. Like imagine a
mortgage that adjusts its terms based on your income and expenses,
or investments that rebalance themselves based on your risk tolerance
and the market.
Speaker 1 (07:45):
That's wild. It's like having a financial guardian angel watching
over you.
Speaker 2 (07:48):
Right.
Speaker 1 (07:49):
So, we talked about AI helping businesses get access to credit,
but what about other ways it's changing the business world.
Speaker 2 (07:54):
Oh, it's huge. Beyond lending, it's revolutionizing everything from cash
flow management to imagine a small business owner who doesn't
have to spend hours on bank statements or tracking inventory.
AI can automate all that so they can focus on
growing their business.
Speaker 1 (08:09):
So AI handles the boring stuff so humans can think
big exactly.
Speaker 2 (08:13):
And it's not just about saving time and money. AI
can help businesses make better decisions too, Like by looking
at past sales data, market trends, even weather patterns, AI
can predict what products people will want with amazing accuracy.
Speaker 1 (08:27):
No more guessing games when it comes to stocking up exactly.
Speaker 2 (08:31):
That kind of predictive power is a game changer for
any business helps them run smoothly and stay ahead of
the competition.
Speaker 1 (08:38):
Okay, let's get back to rigtech for a second. We
touched on it before. I want to dig a little deeper.
Is AI going to replace all the lawyers and compliance
officers out there?
Speaker 2 (08:47):
I don't think it'll completely replace them, but it's definitely
changing how compliance works. AI can go through mountains of
data and spot patterns that could be violations way faster
than we can, so the humans can focus on the
really tough cases instead of getting bogged down in the
routine stuff.
Speaker 1 (09:01):
So AI is like a superpowered assistant for the compliance team.
Speaker 2 (09:04):
Yeah, think of it as a partnership. AI does the
heavy lifting with data and finding patterns, and the humans
bring the judgment, the experience, the ethics makes sense.
Speaker 1 (09:12):
It's like having a super powered research assistant, right. Okay,
Now let's talk about something I've always been fascinated by
predicting the future, you know, financial forecasting. Can AI actually
tell us what's going to happen with the economy or
the stock market? Isn't that like the holy grail of finance?
Speaker 2 (09:29):
It's definitely the big challenge, but AI is making some
serious progress. You know, Traditionally forecasting has been based on
historical data and statistical models, but those can be limited
because the global economy is so complex and interconnected.
Speaker 1 (09:43):
So what's different about AI powered forecasting.
Speaker 2 (09:46):
Well. AI can analyze massive amounts of data from all
kinds of sources like social media, sentiment, news articles, economic indicators,
even geopolitical events.
Speaker 1 (09:56):
Wow, it's taking everything into account.
Speaker 2 (09:57):
Right, and by finding patterns and connections that we might miss,
AI can give us a much more accurate and nuanced
picture of what's driving the markets.
Speaker 1 (10:06):
So instead of just looking at the past, we can
actually get a glimpse of what's coming.
Speaker 2 (10:09):
In a way. Yeah, it's not about predicting the future perfectly,
but about getting a better understanding of the possibilities what's
likely to happen. That helps investors and policymakers make smarter decisions,
manage risk better, and maybe even lessen the impact of
economic downturns.
Speaker 1 (10:25):
That's incredible. It's like having a crystal ball for the
global economy. But with all this talk about what AI
can do, it's easy to forget about the potential downsides.
Speaker 2 (10:33):
That's a good point. We can't just get swept up
in the excitement. We need to think about the risks
and challenges and make sure we're using this technology ethically
and responsibly.
Speaker 1 (10:43):
Speaking of responsibility, let's talk about the elephant in the room. Jobs.
Are robots going to take over the financial sector? Are
we all going to be out of work?
Speaker 2 (10:51):
I know that's a big worry for a lot of people,
especially in finance, which has always been seen as this,
you know, high skilled, high paying field, and it's natural
to be concerned about automation.
Speaker 1 (11:03):
I've seen articles saying that AI could lead to massive
job losses in finance. It's definitely a worry.
Speaker 2 (11:09):
Well, it's true that AI will automate some tasks and roles,
but I believe that ultimately it'll create more opportunities than
it eliminates.
Speaker 1 (11:17):
So instead of thinking of AI as a job killer,
we should think of it as a job transformer exactly.
Speaker 2 (11:22):
It's about adapting. The most valuable skills in the future
will be the ones that work with AI, not against it.
Speaker 1 (11:29):
You keep mentioning those skills that complement AI. Can you
give some specific examples. What should people be focusing on
if they want to stay ahead of the game.
Speaker 2 (11:37):
Definitely, one big thing is understanding data, how to analyze it,
visualize it, even tell stories with it.
Speaker 1 (11:44):
So it's not just about coding or building algorithms, it's
about understanding what the AI is telling us exactly.
Speaker 2 (11:49):
We also need strong critical thinking skills to be able
to look at the AI's output and make good decisions.
AI can give us amazing tools, but it's up to
us to use them wisely.
Speaker 1 (12:00):
Like the future of finance is going to need both
technical skills and good judgment.
Speaker 2 (12:03):
Exactly, and probably the most important thing is developing our
emotional intelligence and interpersonal skills.
Speaker 1 (12:09):
Wait why are those skills so important in a world
that's becoming more automated.
Speaker 2 (12:12):
Because AI can do the numbers and the analysis, but
it can't replace human empathy, intuition, creativity. Those things become
even more valuable as AI takes over the routine tasks,
leaving us to focus on the human side of finance,
building relationships, understanding what clients need, giving personalized advice.
Speaker 1 (12:32):
So it's not just about being a tech waise, it's
about being a good communicator, a good listener, a good
problem solver exactly.
Speaker 2 (12:38):
The people who will really thrive in the AI era
are the ones who can combine technical expertise with human
empathy and ingenuity.
Speaker 1 (12:46):
That's a really encouraging message. It means the futures and
set in stone. It's up to us to shape it
in a way that benefits everyone.
Speaker 2 (12:52):
I agree, it's an exciting time to be in finance.
I'm optimistic about the possibilities me too.
Speaker 1 (12:56):
I think this deep dive has given our listeners a
lot to think about. AI is changing the financial world
in a big way, and we need to stay informed, engaged,
and be ready to adapt.
Speaker 2 (13:04):
Well said, and I think the most important takeaway is
that it's not humans versus machines. It's about humans and
machines working together to create a better future for everyone.
Speaker 1 (13:14):
That's a great point. Well, this has been a fascinating discussion.
Thanks for joining us for this deep dive into the
AI revolution and finance. We hope you found it informative
and thought provoking. My pleasure and to our listeners, keep learning,
stay curious, and embrace the power of AI. Until next time.
All right, welcome back for the final part of our
deep dive into AI and finance. We've covered a lot
(13:36):
of ground, how AI is being used, the ethics, the
future of work. Got to say, it's a lot to
wrap your head around.
Speaker 2 (13:43):
It is definitely a lot to process, but I think
that's what makes it so exciting. You know, all these
possibilities AI is opening up.
Speaker 1 (13:49):
Yeah, totally. You've mentioned a few times this idea of
AI democratizing finance. Yeah, what does that really mean? How
does that actually play out?
Speaker 2 (13:57):
Well, think about it. For a long time, you know,
access to really good financial tools and advice that was
mostly for the wealthy, the well connected. AI has the
potential to change that. We're already seeing it with those
robo advisors giving personalized investment advice at a fraction of
the cost of a traditional advisor.
Speaker 1 (14:14):
So it's not just about making things cheaper, it's about
making financial expertise available to everyone, no matter how much money.
Speaker 2 (14:21):
They have exactly, and it goes beyond just investing. Think
about AI tools that can help people budget better, safer retirement,
even make those big financial decisions like buying a house
or starting a business. These tools could empower people to
be in control of their financial lives in a way
that just wasn't possible before.
Speaker 1 (14:41):
Yeah, Like AI is leveling the playing field, giving everyone
the tools they need to succeed financially.
Speaker 2 (14:47):
That's the idea. Of course, there are still challenges. We've
got to make sure these AI tools are designed fairly,
you know, without those built in biases, and we need
to make sure people actually know how to use them,
have that digital literacy right.
Speaker 1 (14:58):
It's not enough to just build a tech We need
to create an environment where everyone can actually benefit.
Speaker 2 (15:03):
Absolutely, it's about a more inclusive and equitable financial system.
Speaker 1 (15:07):
Okay, let's circle back to jobs for a minute. A
lot of folks are worried about AI taking over, especially
in finance, which has always been seen as a secure,
well paying field. Is that a legitimate fear.
Speaker 2 (15:19):
It's definitely a valid concern. And yeah, some jobs will
be automated as AI gets more advanced, there's no way
around that. But I think AI will also create new opportunities.
It'll change what work looks like in finance, not eliminated entirely.
Speaker 1 (15:33):
So instead of AI being a job killer, it's more
like a job transformer exactly.
Speaker 2 (15:37):
It's about adapting. The skills that will be most valuable
are the ones that work with AI, not against it.
Speaker 1 (15:43):
You've talked about those skills that complement AI a few times.
Can you give us some concrete examples. What should people
be focusing on to stay ahead of the curve.
Speaker 2 (15:50):
Sure one big one is understanding data, knowing how to
analyze it, visualize it, even tell stories with it.
Speaker 1 (15:57):
So it's not just about coding or building the algorithms.
It's about understanding what the AI is telling us.
Speaker 2 (16:02):
Right, We also need strong critical thinking skills so we
can evaluate what the AI is giving us and make
good decisions. AI gives us powerful tools, but it's still
up to humans to use them wisely.
Speaker 1 (16:13):
Sounds like the future of finance needs both technical skills
and good old fashioned.
Speaker 2 (16:16):
Judgment exactly, and maybe even more importantly, we need to
develop our emotional intelligence and interpersonal skills.
Speaker 1 (16:22):
Now that's interesting. Why are those skills so crucial in
the world that's becoming more and more automated.
Speaker 2 (16:27):
Because AI can handle the numbers in the analysis, but
it can't replicate things like human empathy, intuition, creativity. Those
qualities become even more important as AI takes over the
routine work that frees us up to focus on the
human side of finance, you know, building relationships, understanding clients' needs,
giving truly personalized advice.
Speaker 1 (16:48):
So it's not just about being a tech quiz, it's
about being a good communicator, a good listener, a good
problem solver.
Speaker 2 (16:54):
Absolutely, the people who will really thrive in this AI
driven world are the ones who can combine and that
technical expertise with human empathy and ingenuity.
Speaker 1 (17:04):
That's a really hopeful message. It means we have a
say in how this all unfolds. The future of finance
isn't set in stone.
Speaker 2 (17:11):
I agree, it's an exciting time to be in finance.
I'm optimistic about the possibilities me too, and.
Speaker 1 (17:17):
I think this deep dive has given our listeners a
lot to think about. AI is transforming finance in some
pretty profound ways, and we need to stay informed, stay engaged,
and be ready to adapt.
Speaker 2 (17:29):
I couldn't have set it better myself. The key takeaway
here is that it's not humans versus machines. It's about
humans and machines working together, you know, to build a
better future for everyone.
Speaker 1 (17:40):
That's a great point to end on. This has been
a fascinating conversation. Thanks for joining us for this deep
dive into the AI revolution in finance. We hope you
learn something new and that it sparks some interesting thoughts.
Speaker 2 (17:51):
It's been a pleasure. Thanks for having me and to.
Speaker 1 (17:53):
All our listeners out there, keep learning, stay curious, and
embrace the power of AI. We'll see you next time
for another deep dive.
Speaker 2 (18:00):
If