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Presenters: Paolo Sironi (FinTech Thought Leader, IBM Watson Financial Service), Sameer Gulati (COO, Lending Club), JinA Bae (Head of Corporate Venture, Hanwha Asset Management), Luchang Zheng (Founding Partner, Blockchain Hero), Gunnar Carlsson (Co-Founder and President, Ayasdi), Bill Reichert (Partner, FoundersX Ventures, Managing Partner, Garage Technology Ventures) To read the full report click here for the digital edition. FinTech has revolutionized the way that banks and insurance companies function. Rather than prioritizing themselves and their services as in the past, banks must emphasize client needs in today’s new technological era. This focus on personalized financial services manifests itself in FinTech—a financial infrastructure for consumer enablement. As FinTech applies data and technology to financial services in an effort to address industry challenges, artificial intelligence is essential to FinTech’s existence and usage. The “AI in FinTech” panelists focused on how artificial intelligence has transformed financial services. Recognizing that financial technology startups must operate as tech companies while respecting financial regulations, the speakers underscored FinTech’s complexity. FinTech forsakes traditional banking to obsess over customers’ financial inclusion and credit accessibility and customization. This, in conjunction with FinTech’s five pillars of social media, analytics, artificial intelligence, blockchain and digitization, make FinTech companies face not only existing financial challenges, but security and regulatory dilemmas associated with artificial intelligence. KEY TAKEAWAYS Artificial intelligence enables FinTech to occur in real time. FinTech prioritizes financial inclusivity. To achieve this, real time plays an important role in FinTech’s ease of adoption as individuals with a smartphone gain access to quick, personalized and customized financial services. As AI steps in to disrupt the who, what, when and how of finance, as Bae notes, instantaneous decision-making and credit scoring will improve the availability of services in a real time basis. AI creates deep personalization. Deep personalization in financial services allows FinTech to anticipate customer needs without the consumer having to act themselves. As artificial intelligence and machine learning generate and process individuals’ financial and nonfinancial data, Sameer Gulati notes that AI connects end users and FinTech companies to create continuous interaction. Artificial intelligence also helps evaluate lenders and debtors to speed up financial service processes and improve the customer experience. Because of the new type of relationship fostered with consumers at scale, AI redefines the concept of real time and applies it to finance. FinTech prioritizes financial service speed. The benefit of FinTech is that it improves the customer’s financial services experience. As consumers prioritize speed and ease in their daily lives, so does FinTech. Technological applications such as mobile pay, Luchang Zheng recognizes, improve the efficiency and accessibility of financial transactions while quickening the pace of financial services. As individuals call for faster financial activities, FinTech is pressured to meet time demands by prioritizing that financial services are conducted on a real time basis. FinTech changes financial services’ business model. FinTech is a business model innovation. As financial technologies prioritize information technology to innovate financial services, the financial industry must also become more innovative to keep apace with an increasingly more technological sector. As FinTech’s business model prioritizes peer-to-peer lending and aims to overcome legacy leadership—in which company leaders do not understand nor are motivated by technology and automation—entrepreneurship and technology play important roles. Technology enables FinTech’s business model. FinTech’s fifth pillar, digitization, is central to its business model. Digitization has enabled innovators like Lending Club to capitalize on a technological approach to financial services and ultimately enable FinTech to be a category within the venture capital world. Technology has helped FinTech companies establish new business models as payment transactions occur by mobile phones and venture capitalists invest in financial technology companies. Banks and FinTech companies do not pursue simple business collaboration. Noting that FinTech is much messier than “collaboration and kumbaya,” Bill Reichert underscored the role of Silicon Valley’s enterprising spirit and the financial industry’s ignorance in creating the current business model. The nature of financial services and their accompanying regulations tend to deter individuals that are familiar with financial proceedings from innovating within the industry. Reichert notes that many entrepreneurs set out to do “insane things” and through their more haphazard experiences with trial and error, the companies that survive either are adopted by large financial institutions that serve as mentors, or have disrupted the regulatory environment and business models enough to instigate progress within the industry. AI regulatory applications can help manage financial risks. Financial crises are the greatest cause of job losses. Though many assign automation or regulation as the largest instigators of worker displacement, global financial crises have led to more unemployment over the past century than any other cause. As the financial industry endeavors to mitigate the risk of another recession, one questions whether AI can be applied at the highest regulatory level to manage financial risks while still innovating in financial services. AI assists regulation to mitigate risks. Artificial intelligence and machine learning strive to minimize errors. As such, Reichert asserts that AI should play a role in the financial system’s overall governance. Currently, artificial intelligence only identifies strong signals. But to give AI a greater regulatory role in anticipating risks, systems need to capture weak signals as well. Carlsson notes that AI systems should identify smaller, underlying signals that are not primary drivers today, but could become strong signals and risks tomorrow. By doing so, artificial intelligence will apply its predictive powers to financial regulation. China has benefited from its tech regulations. Although AI technology was born in the United States, Paolo Sironi notes that China has made great advancements in developing the technology, having the potential to become the largest tech owner in the future. As China has experienced continuous economic growth for the past 40 years and avoided financial recessions, the speakers link this to the nation’s regulatory environment. When compared to South Korea, JinA Bae highlights that China permits insurance companies and banks to pursue most financial activities unless explicitly stated. The opposite is true in South Korea where, unless defined as acceptable, most financial activities are restricted by the Korean government. Overregulation can restrict innovation. Though regulation can help manage financial risks, it can adversely affect insurance companies, banks and conglomerates by stunting their innovative growth. Bae notes the challenges facing Hanwha Asset Management under South Korean regulation. After investing in the largest peer-to-peer lender in China and hoping to establish a joint venture together, the South Korean government essentially killed the P-to-P lending business within the country. However, Asian conglomerates are quite influential in terms of dealing with the government, providing opportunities to work with market leaders in advanced markets. Korean conglomerates help companies scale in Asia by convincing the government to open up its market over time. AI and blockchain can overcome security dilemmas. Security dilemmas often accompany digitization. As AI continues to grow, so can its threat to data privacy and security. But while artificial intelligence can often contribute to security dilemmas, AI can also solve them. To ensure that technology overcomes security issues, machine learning and AI should be human-centric and recognize that humans often create security challenges and should thus be a part of their solution. Financial services can be both digital and secure through AI usage. Machine intelligence software companies, such as Ayasdi, that build predictive models and automated applications using AI can overcome financial problems related to security. By using machine learning to segment populations and transactions based on levels of riskiness, artificial intelligence alerts investigators of fraudulent transactions, money laundering and threats to data protection. Gunnar Carlsson notes that alerting is not enough and that AI should enable investigators to predict when transactions are secure and when they are not, while recognizing that systems will not perfectly predict fraudulences, but can help in filtering cases. Blockchain improves financial data transparency and traceability. As data in blocks cannot be unwritten and consequently cannot be tampered with, blockchain technology secures data. Blockchain also helps protect information and end user privacy by applying its zero-knowledge proof technology. Rather than extracting all information in the banking system when only some information is needed, Luchang Zheng notes that blockchain technologies extract only relevant information in an anonymous manner. Not only does blockchain shorten the data extraction process, but it secures the banking system as a whole.

But it’s difficult to think about value when we have no buoy for understanding it outside our traditional lenses: for example, our time, our job, and what others tell us they are worth in cash. This, largely, is the world’s paradigm for value so far. But understanding what value really means changes everything—and will be at the center of the decentralized revolution in global coordination that will unfold over the next decade. So, where do we begin?

Let’s start with gold.

Gold is an inherent value. When backing a market, gold allows us to grow a balanced economy well into the trillions. But why does it allow for massive stable markets to form around it? It is gold's permanence that creates stability. We understand that gold will always have value, because it is inherent in all of us, not just in one part of the world, but everywhere, not just today, but tomorrow and for the long haul.

In the 1930s when the gold standard was removed, we learned that the U.S. dollar didn’t need gold to back its economy to flourish. We learned that it was just a symbol for U.S. citizens to decentralize their coordination around the United States economy.

It turns out, common agreement is a philosophy for building shared economy.



And so it seems inherent value is a marker for us to begin exploring what the future could look like—a future beyond gold and the existing realm of credit. And so what else has inherent value? Is education as valuable as gold? What about healthcare? What about a vote that can’t be tampered with? What about an ID that can’t be stolen or erased? What about access to nutrition or clean water? You will find value everywhere you look.



It turns out, we’ve already done the legwork necessary to uncover the most elemental inherent values: The Sustainable Development Goals are commitments grown out of the drive to bring to life basic tenets of the Universal Declaration of Human Rights—the closest possible social contract we have to a global, common agreement.

We’ve already agreed, as a global community, to ensure inclusive and equitable access to quality education. We’ve already agreed to empower all women and girls, to ensure pure and clean water access for all, to promote health at all stages of life, and to end hunger.

We’ve already agreed.

Our agreements are grounded in deep value centers that are globally shared, but undervalued and unfulfilled. The reason for this is our inability to quantify intangible value. All of these rich, inherent values are still nebulous and fragmented in implementation—largely existing as ideals and blueprints for deep, globally shared common agreement. That is, we all agree education, health, and equality have value, but we lack common units for understanding who and who is not contributing value—leaving us to fumble in our own, uncoordinated siloes as we chase the phantoms of impact. In essence, we lack common currencies for our common agreements.

Now we find ourselves at the nexus of the real paradigm of Blockchain, allowing us to fuse economics with inherent value by proving the participation of some great human effort, then quantifying the impact of that effort in unforgeable and decentralized ledgers. It allows us to build economic models for tomorrow, that create wholly new markets and economies for and around each of the richest of human endeavors.



In late 2017 at the height of the Bitcoin bubble, without individual coordination, planning, or the help of institutions, almost $1 trillion was infused into blockchain markets. This is remarkable, and the revolution has only just begun. When you realize that Blockchain is in a similar stage of development as the internet pre-AOL, you will see a glimpse of the global transformation to come.



Only twice in the information age have we had such a paradigm shift in global infrastructure reform—the computer and the internet. While the computer taught us how to store and process data, the Internet built off that ability and furthered the conversation by teaching us how to transfer that information. Blockchain takes another massive step forward—it builds off the internet, adding to the story of information storage and transfer—but, it teaches us a new, priceless and not yet understood skill: how to transfer value.



This third wave kicked off with a rough start—as happens with the birth of new technologies and their corresponding liberties. Blockchain has, thus far, been totally unregulated. Many, doubtless, have taken advantage. A young child, stretching their arms for the first couple times might knock over a cookie jar or two. Eventually, however, they learn to use their faculties—for evil or for good. As such, while it’s wise to be skeptical at this phase in blockchain’s evolution, it’s important not to be blind to its remarkable implications in a post-regulated world, so that we may wield its faculties like a surgeon’s scalpel—not for evil or snake-oil sales, but for the creation of more good, for the flourishing of commonwealth.

But what of the volatility in blockchain markets? People agree Bitcoin has value, but they don’t understand why they are in agreement, and so cryptomarkets fluctuate violently.  Stable blockchain economies will require new symbolic gold standards that clearly articulate why someone would agree to support each market, to anchor common agreement with stability. The more globally shared these new value standards, the better.

Is education more valuable than gold? What about healthcare or nutrition or clean water?


We set out in 2018 to prove a hypothesis—we believe that if you back a cryptocurrency economy with a globally agreed upon inherent value like education, you can solve for volatility and stabilize a mature long lasting cryptomarket that awards everyone who adds value to that market in a decentralized way without the friction of individual partnerships.

What if education was a new gold standard?

And what if this new Learning Economy had protocols to award everyone who is helping to steward the growth of global education?



Education is a mountain. Everyone takes a different path to the top. Blockchain allows us to measure all of those unique learning pathways, online and in classrooms, into immutable blockchain Learning Ledgers.

By quantifying the true value of education, a whole economy can be built around it to pay students to learn, educators to create substantive courses, and stewards to help the Learning Economy grow. It was designed to provide a decentralized way for everyone adding value to global education to coordinate around the commonwealth without the friction of individual partnerships. Imagine the same for healthcare, nutrition, and our environment?



Imagine a world where we can pay refugees to learn languages as they find themselves in foreign lands, a world where we can pay those laid off by the tide of automation to retrain themselves for the new economy, a world where we can pay the next generation to prepare themselves for the unsolved problems of tomorrow.



Imagine new commonwealth economies that alleviate the global burdens of poverty, disease, hunger, inequality, ignorance, toxic water, and joblessness. Commonwealths that orbit inherent values, upheld by immutable blockchain protocols that reward anyone in the ecosystem stewarding the economy—whether that means feeding the hungry, providing aid for the global poor, delivering mosquito nets in malaria-ridden areas, or developing transformative technologies that can provide a Harvard-class education to anyone in the world willing to learn.


These worlds are not out of reach—we are only now opening our eyes to the horizons of blockchain, decentralized coordination, and new gold standards. Even though coordination is the last of the seventeen sustainable development goals, when solved, its tide will lift for the rest—a much-needed rocket fuel for global prosperity.

“Let us raise a standard to which the wise and the honest can repair.”  —George Washington
The views presented in this article are the author’s own and do not necessarily represent the views of any other organization.