FinTech - Lecture 13 : Cyber-Physical Society and Future of Finance

These slides were used in the lecture 13 of FinTech - Financial Innovation and the Internet 2020 Fall at the Graduate School of Business and Finance, Waseda University, on January 8, 2021.

Transcript

1. QIPUP
   CZ
   0MJWFS
   ) FinTech — Financial Innovation and the Internet 2020 Fall Lecture 13 : Cyber-Physical Society and Future of Finance Kenji Saito Professor, Graduate School of Business and Finance, Waseda University Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2020 Fall — 2021-01-08 – p.1/26
2. This class is recorded Camera ON is recommended, but not required You do need to speak often (we are going to have a lot of dialogue) We will use breakout rooms a lot, but those won’t be recorded unless you do it yourselves (need to be allowed) Keep your Zoom client updated! We might use latest features The recordings could be used for research on online learning Transcribed for use and anonymized Will let you know when the necessity arises Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2020 Fall — 2021-01-08 – p.2/26
3. The lecture slides can be found at : https://speakerdeck.com/ks91 Recording and chat text will be posted at Moodle and Discord Trial automatic transcription of the lecturer’s part will be posted at Discord Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2020 Fall — 2021-01-08 – p.3/26
4. Schedule (provisional) Lecture 1 9/25 Overview of FinTech (1) • Lecture 2 10/2 Overview of FinTech (2) • Lecture 3 10/9 Internet Technology and Governance (1) • Lecture 4 10/16 Internet Technology and Governance (2) • Lecture 5 10/23 The World of Apps (1) • Lecture 6 10/30 The World of Apps (2) • Lecture 7 11/13 Blockchain (1) • Lecture 8 11/20 Blockchain (2) • Lecture 9 11/27 Smart Contracts (1) • Lecture 10 12/4 Smart Contracts (2) • Lecture 11 12/11 Other Ledger Technology and Applications (1) • Lecture 12 12/18 Other Ledger Technology and Applications (2) • Lecture 13 1/8 Cyber-Physical Society and Future of Finance • Lecture 14 1/15 FinTech Ideathon Lecture 15 1/22 Presentations and Conclusions Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2020 Fall — 2021-01-08 – p.4/26
5. Last Week, We Did . . . Assignment Review Q & A Assignment Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2020 Fall — 2021-01-08 – p.5/26
6. Today’s Topic Assignment Review Self-driving cars and FinTech Cyber-Physical Society and Future of Finance Discussion Changes in Economy and Labor Assignment International aviation business and FinTech This can be the theme for the ideathon and presentations But if you have other specific ideas, please pursue them! Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2020 Fall — 2021-01-08 – p.6/26
7. Assignment Review Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2020 Fall — 2021-01-08 – p.7/26
8. Assignment 6. “Cyber-Physical” Summarize an idea of combining self-driving cars and FinTech i.e., please select one or more from “settlement and remittance”, “asset management”, “deposits and loans”, “financing”, “insurance”, and “capital market” Apply FinTech to it with respect to self-driving cars Deadline and how to submit January 5, 2021 at 17:59 JST From Moodle (mandatory) Optionally, you can also post to #assignments channel at Discord So that your classmates can read your report, refer to it, and comment on it Just plain text, and be concise, please Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2020 Fall — 2021-01-08 – p.8/26
9. Trends and Measures Trends . . . of your reports Measures . . . how to improve the class 13 out of 16 students submitted (pretty good, and always better late than never) Applications of FinTech to self-driving cars : Renting cars (5) / Insurance (5) / Mobile financial station (4) / Alternative data-driven financing (2) / Shopping (1) Pretty good! Using as an alternative data has not really occured to my mind before What’s alternative data in finance? https://en.wikipedia.org/wiki/Alternative_data_(finance) Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2020 Fall — 2021-01-08 – p.9/26
10. K’s Idea Under the assumption that self-driving cars become common, they can be a good source of data for predicting stock price movements by tracking the number of visitors to stores (I assume it is easier to collect data from these cars than from smartphones due to privacy settings by phone users) The data could also provide good estimates of the number of people working from home, and the dynamics of it (is the trend fading or growing), which in turn affects the housing market Thus, we could predict house price trends ⇒ Very interesting view to see self-driving cars as sensors Not only for auto-driving itself but for movements of people That’s really cyber-physical! Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2020 Fall — 2021-01-08 – p.10/26
11. X’s Idea Nowadys, people tend to buy cars for private use, mainly through bank loan But when self-driving cars are available and get widely used, people only need to connect with the cars (through app or so on) and then the car most nearby would drive to this person on its own When he gets in the car, it need to identify whether this is the right customer via blockchain encryption technology At the end of the travel, he could pay the fee using bitcoin In this way, people do not need to pay a large sum of money to buy their own car and most importantly, payment would be more safe ⇒ Good, but what do you mean by blockchain encryption? Encryption does not appear anywhere in the original design of blockchain Except for private keys in wallets, but that’s not part of blockchain Usually, possession of a private key is proven by a digital signature, not necessarily involving encryption Although encryption-decryption can be used for authentication Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2020 Fall — 2021-01-08 – p.11/26
12. S’s Idea . . . Not to mention insurance on transportation, this could be highly customized based on an individual’s transporting habits and needs, which could be easily calculated from the company’s end, as the automobile is owned by the company The condition, performance of every automobile is monitored and maintained by the company itself, and no longer a fickle factor controlled by the consumer’s end This concept of car insurance is inspired by Tesla’s “softwarization” of automobiles, collecting mass amounts of data from its users, and ever improving its autopilots through these data More importantly, these valuable data provides insights to driver’s driving habits, accident rates under various conditions, and more With enough data, Tesla would be the most competitive car insurance provider in the market, because it can tailor to each driver the best price possible due to its capability of projecting driver’s risk with precision through its data ⇒ Softwarization is really analogous to many ongoing changes Including books and music Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2020 Fall — 2021-01-08 – p.12/26
13. Cyber-physical Society and Future of Finance Key concepts : Cyber-physical and Cognitive Aim for future — like passing the ball to a moving teammate Life with Earth-Scale OS (Operating System) and Meta-Nature Changes of Economy Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2020 Fall — 2021-01-08 – p.13/26
14. Cyber-physical Cyber ← Cybernetics Focus on communication and control, so that animals, machines and other systems can be uniformly understood Reference to our nervous system → sensing and actuation (physical to begin with) Cyber-physical Apply cybernetics, physical to begin with, to the physical society Specific space, or the whole society functions by sensing and actuation Social infrastructures that support human lives and computer networks will be tightly connected through a variety of (AI-assisted) sensors, actuators, mobile devices such as smart phones, or even laws Today, we are always connected with information environments through smart phones and such, and therefore we are already at the entrance of the cyber-physical age Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2020 Fall — 2021-01-08 – p.14/26
15. Cognitive Not general-purpose artificial intelligence (not replacement of human) No need to have “consciousness” → no need to be ASTROBOY ( ) Does “learn” and “infer” → can be like GIGANTOR (Tetsujin 28-Go; 28 ) Extension of human abilities of recognition and intellectual processing It really is off-the-shelf technology today Demonstration of hand-written number recognition (http://cs.stanford.edu/people/karpathy/convnetjs/) Perhaps, children’s work-place experience at a post office should start with something like above? It is not a question of machines taking people’s jobs It is a question of people sticking to jobs machines or machine-assisted users are better at ⇒ There is going to be an inevitable social shifts Important part of cyber-physical society : “Artificial Neural Network” Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2020 Fall — 2021-01-08 – p.15/26
16. Aim for Future What’s the trends of the changes from today → 30 years later? Even to aim a little ahead, we must be sure of the direction, because things are moving If you see things too closely to present, the business will be short-lived if social changes are rapid e.g. × Business assuming that self-driving cars are personally owned Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2020 Fall — 2021-01-08 – p.16/26
17. Earth-Scale OS (Operating System) (2007) This is cyber-physical, applying cybernetics to the physical world “Centers” are going to be automated → Rise of DeFi (Decentralized Finance) Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2020 Fall — 2021-01-08 – p.17/26
18. Earth-Scale OS and Meta-Nature Anthropology Informatics Environmental Studies Sociology Business Administration Politics Today Hardware Applications User OS Human Business Financial System Human Business Earth-Scale OS Automation System Earth Earth Near Future (as of 2007) Human Meta-Nature (Highly-automated decentralized social environment) Earth Near Future (as of 2021) To the left is just an excerpt of the typical studies involved Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2020 Fall — 2021-01-08 – p.18/26
19. Amazon Go Shoppers are insensible of money → money will soon be invisible Variety of monetary media, coupons and points can work underneath the visible shopping environments Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2020 Fall — 2021-01-08 – p.19/26
20. World with a Variety of Digital Currencies Global currencies such as bitcoin Digitization of national currencies (“digital JPY” in Japan) MUFG coin, J-coin, S-coin (digital coins by banks and alike) Trials by communities Trials by central banks (CBDC : Central Bank Digital Currency) Local currencies, “cause-oriented economy” Making an entry to the world where a variety of digital currencies are in use We will be insensible of its complexity, and we will just clarify our policies We will not even care whether the mechanism underneath is monetary or not Agents (e.g. smart phone apps) will start suggesting actions according to the policies Sharing economy will join, too ⇒ Decline of Monetary Economy! cf. “Maneki Neko” Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2020 Fall — 2021-01-08 – p.20/26
21. Tetrad of Monetary Economy Exchange, Consumption, Saving, Investment Specialization Agricultural / Industrial Society Economic Gaps, Exploitation, Bankruptcy Digital Currency, FinTech and further ENH REV RET OBS Domination and Obedience Hierarchy Profit Maximization (Money-less) Trust System, Gift Economy Omnipotence Hunting and Gathering Society ENH : enhancement OBS : obsolescence RET : retrieval REV : reversal New media revive what have been once made obsolete, but will “gift economy” and “omnipotence” be revived? Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2020 Fall — 2021-01-08 – p.21/26
22. Trends of the Changes Radicalization of money and finance leads to stagnation of exchanges and consumptions → Rise of sharing economy Life style of running economy without specialization (also boosted by AI or digital fabrication) → Degeneration of taxable economic activities Changes in how public works are carried out ← opportunities for us → At that point, we have already seen decline of money, have we not? By pushing the principles of monetary economy forward, money would rather retreat from the front stage of our lives, because accommodation without needing money are preferred → Destroys “employments” and “separation of selling and buying” Distinction between “ruler and ruled” or “producers and consumers” will melt away Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2020 Fall — 2021-01-08 – p.22/26
23. Discussion : Changes in Economy and Labor How will economy be like after 30 years from now? How are we going to live through the path leading to that economy? How do we begin? Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2020 Fall — 2021-01-08 – p.23/26
24. Assignment Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2020 Fall — 2021-01-08 – p.24/26
25. Assignment 7. “International Aviation Business” Summarize an idea for applying FinTech to the international aviation business This includes anything that appears at international airports and beyond Examples : passports, visas, airline tickets, immigration, customs, airplanes, money exchange, duty-free shops, etc. Use of blockchain (or better versions of them) is recommended because of the need to handle legal or any rightful records across countries Or, if you have a specific idea for another application, summarize that instead Deadline and how to submit January 12, 2021 at 17:59 JST From Moodle (mandatory) Optionally, you can also post to #assignments channel at Discord So that your classmates can read your report, refer to it, and comment on it Just plain text, and be concise, please Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2020 Fall — 2021-01-08 – p.25/26
26. See You Next Week! Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2020 Fall — 2021-01-08 – p.26/26