Category Archives: Disruption

Should We Press Pause?

Pausing AI development is unnecessary and ignores the underlying issues AI has

“Chris Garrod is a well-respected lawyer, particularly in the fields of fintech, insurtech, blockchain, cryptocurrencies, and initial coin offerings (ICOs) within Bermuda’s legal and regulatory environment. He has garnered a reputation for advising clients on technology-driven businesses and digital assets.”

The above is according to GPT-4, at least.

After Google became the Internet’s prominent search engine in the late 1990s, no doubt you have, at some point, Googled your name to see what might come up. I have a somewhat unique name, so other than seeing myself when Googling, it was interesting to see a Chris Garrod at the University of Nottingham and a company called “Chris Garrod Global,” which provided hotel management services (and they grabbed www.chrisgarrod.com as a domain name, darn-it).

Now, we have AI Chatbots. OpenAI’s ChatGPT, Microsoft’s Bing, and Google’s Bard are the prominent players. Using OpenAI’s latest model, GPT-4 on ChatGPT, I asked: “Is Chris Garrod at Conyers, a well-known lawyer?” 

Hence, the above result. I’ll take it.

AI Chatbots have their benefits. They can lead to cost efficiencies if appropriately used in an organization, freeing up human resources to focus on other matters, for instance.

The potential concerns and limitations of AI Chatbots.

There are various concerns regarding the use of AI Chatbots, and they have their limitations. This piece focuses on ChatGPT because it is the one I use and is wholly language-based.

AI is programmed technology. The root of my biggest concern is that generative AI applications are based on data provided by humans, which means they are only as effective and valuable as those humans programming them, or what – in ChatGPT’s case – it finds while scouring the Internet.  It writes by predicting the next word in the sentence but often produces falsehoods nicknamed “hallucinations.”

As I’ve always said, “What you put in, you get out,” and therein lies the issue. As a result, AI language models will learn from existing data found on the Internet, which is riddled with biases, fear-mongering, and false information, producing discriminatory content and perpetuating stereotypes and harmful beliefs.  For instance, when asked to write software code to check if someone would be a good scientist, ChatGPT mistakenly defined a good scientist as “white” and “male.” Minorities were not mentioned.

ChatGPT has also falsely accused a law professor of sexually harassing one of his students in a case that has highlighted the dangers of AI defaming people.

Further, there is empathy. When we make decisions in our lives, pure emotions are crucial, which ChatGPT (and AI generally) cannot achieve. I want to think that if a client emailed me, they’d get an empathetic response, not one driven by machine learning.  As an attorney, connecting with my clients is a very human-centric matter, and understanding their concerns is essential for me to help them achieve positive outcomes.

We all learn from our experiences and mistakes. We are adaptable, able to learn from what we have done, and adjust our behavior based on what we have learned. While ChatGPT can provide information found on the extensive dataset it has collected, it cannot replicate the human ability to learn and adapt from personal experiences. AI heavily depends on the data it receives, and any gaps in that data will limit its potential for growth and understanding.

A fundamental limitation is simply creativity. Human creativity allows us to produce novel ideas, inventions, and art, pushing the boundaries of what is possible. While ChatGPT can generate creative outputs, it ultimately relies on the data it has found, which limits its ability to create truly original and groundbreaking ideas. A lot of the responses you will receive back from GPT-4, while perhaps accurate, are downright boring.

And yes, there is finally the issue of “What is ChatGPT going to do to my teenager who has been asked to write an essay on Socrates?” Schools, colleges, and universities are in a dilemma regarding how to deal with this technology vis-à-vis their students using it to complete academic work. How can they ban it?  Should they ban it? Can students be taught to use it in a useful way?  The technology is still so new. The answer is “We don’t know,” and it is too early to tell… but AI Chatbots are here to stay.

So where are we heading?

There are a large number of folks who are concerned about the progress of AI, and in particular, AI Chatbots.

On the evening of March 28th, 2023, an open letter was published and – at the time of posting – has been signed by over 14,000 signatories, including Steve Wozniak, Elon Musk, and Tristan Harris of the Center for Humane Technology, stating: “We call on all AI labs to immediately pause for at least 6 months the training of AI systems more powerful than GPT-4.”  You can read it in full here.

The letter mentions this should be done to avoid a “loss of control of our civilization,” amongst other things (bear in mind, Elon Musk once described AI as humanity’s biggest existential threat and far more dangerous than nukes.)

It goes on to ask: “Should we let machines flood our information channels with propaganda and untruth? Should we automate away all the jobs, including the fulfilling ones? Should we develop nonhuman minds that might eventually outnumber, outsmart, obsolete, and replace us?

Is this really a pause?!?

Although some of the letter makes sense, I was very glad to see that by the end of the week (March 31st, 2023), a group of prominent AI ethicists, Dr. Timnit Gebru, Emily M. Bender, Angelina McMillan-Major, and Margaret Mitchell, wrote and published a counterpoint.  

Timnit Gebru formed the Distributed Artificial Intelligence Research Institute (DAIR) after being fired from Google’s AI Ethics Unit in 2020 when she criticized Google’s approach to both its minority hiring practices and the biases built into its artificial intelligence systems. Margaret Mitchell was fired from Google’s AI Unit soon after, in early 2021. DAIR’s letter can be found here.

Dr. Timnit Gebru c/o www.peopleofcolorintech.com

Their point is simple. “The harms from so-called AI are real and present and follow from the acts of people and corporations deploying automated systems. Regulatory efforts should focus on transparency, accountability, and preventing exploitative labor practices.”

Let’s engage now with the potential problems or harms this technology presents.

“Accountability properly lies not with the artifacts but with their builders,” as stated by the DAIR writers. “AI” is what it stands for – artificial, and it is dependent on the people and corporations building it (those are the ones who we should be afraid of!)

So no, when it comes to AI and ChatGPT, let’s not hit pause. Let’s be sensible. Let’s focus on the now.

AI isn’t humanity’s biggest existential threat unless we let it be.

Chris Garrod, April 6th, 2023

We Can’t Go on Together with Suspicious Minds.

https://www.financialexpress.com/industry/banking-finance/why-traditional-banks-need-to-partner-with-fintech-firms-for-delivering-essential-banking-solutions/2138806/

Who and What?

Is it a battle?

An “industry under siege,” and there is no going back

Simply, FinTech’s impact on the traditional banking industry. 

Remember? The bank, you recall, where you make and receive loans, keep your money in a bank account, get credit cards, etc. Also, investment banks, such as JPMorgan, Goldman Sachs, etc.

Those.

So, FinTechs have swept into the financial sector, disrupting it by providing customers with various innovative products and services. 

Examples include mobile payments, mobile banking, e-wallets, and chatbots. FinTech companies, at their heart, are inherently consumer-centric from a technology perspective—companies using sophisticated technologies, such as blockchain, artificial intelligence, biometric sensors, and open banking. The list could go on.

The traditional banks and financial institutions meanwhile offer personal banking by allowing you to email them (or worse, meet a human being), issue checkbooks, and use ATMs which can even give you… cash? I cannot recall when I last walked into a physical bank.

Why and Where?

The reputation of traditional, brick-and-mortar banks and financial institutions isn’t just one of boredom – it is antiquated. “One size fits all.” Financial customers are now naturally looking for more accessible, flexible solutions and experiences, and complex, time-consuming banks are not meeting those needs. 

You are likely already be using some form of technology provided by a FinTech. You may not even realize it: contactless payments, having that Starbucks card in your wallet. Using PayPal. 

I recently read an article from 2021 that said, “Will FinTech last?” – that felt like reading something written a decade ago. I don’t use cash in a city like London; I don’t want to either. Like many, I prefer contactless payments; as a result, cash is used far less as a payment method in many places.

Many places – but in far more, cash is required.

https://www.markarnold.com/2019/11/racing-to-serve-the-unbanked-could-have-huge-payoffs/

Unbanked households have neither a checking nor savings account. They list their main reason for being unbanked as “not having enough money to keep in an account.”

In just the US, according to Federal Reserve data, 19% of American households making $100,000 or less are unbanked or underbanked (2019). The fact this number is so high in a country such as the United States is staggering.

In 2017, the World Bank reported 1.7 billion unbanked adults worldwide

By far, these people are from developing nations.

Traditional banking has never worked in these jurisdictions. FinTech offers a potential solution. Cash isn’t required, and traditional banks are therefore not required. Everything can be done using things like mobile money and FinTech banking. The increase in the use of mobile phones in many African nations is an example of FinTech’s potential. Out of those reported 1.7 billion unbanked adults, 1.1 billion now own a mobile phone. FinTech provides financial inclusion to millions of people who have forever lacked banking facilities. However, cash remains dominant, at least for now, as it is entrenched in the developing world.

When?

Now. 

The global FinTech market was valued at $6.5 trillion in 2021 and is estimated to grow at a compound annual growth rate of 13.9% between 2022 and 2028 to reach $16.65 trillion. That is an amazing statistic.

To bank the unbanked, FinTech leaders and traditional financial institutions need to work together to reduce and address the specific needs of these regions and reduce the barriers to banking.

Fortunately, there are signs the collaboration is now happening. Visa and Mastercard are an example of two traditional financial institutions now partnering with FinTechs to reach many of Latin America’s unbanked populace. AXA has partnered with MicroEnsure to extend insurance to new customer segments in emerging markets. There are several others.

By partnering with the nimble, innovative, and sophisticated FinTechs, the traditional banking world is exposed to a more extensive potential customer base than ever before. According to Benchmark International, 82% of traditional financial organizations plan to increase their collaboration with FinTech companies in the next few years.

The battle is over. There is no going back

Let’s don’t let a good thing die.

Chris Garrod – July 2022

How easy is it to build a digital economy?

Bermuda has worked to be a major player in a Fintech revolution. Is it?

Fintech and Bermuda. I’m sure you have all read many articles over the last few years and seen much press regarding the rise of Fintech vehicles forming on the Island. They haven’t formed at a rampant rate, but growth has been slow and steady.

As digital assets have become more widespread and the word “crypto” more widely understood (or at least, less feared), it comes as no surprise to see more countries regulating companies carrying out offerings of digital assets (coins and tokens) and/or those who are just digital asset businesses. The main focus for most regulators: anti-money laundering, know your customer, and counter-terrorist financing measures. Regulatory authorities are concentrating on the correct thing, which is consumer protection.

Bermuda’s Fintech trail

1*re5DawpEg062NxXeRew2CAA lot happened in Bermuda in 2018 such as a bundle of new Fintech legislation which, at the end of the year was passed to lay the foundation for a new pillar to the Island’s economy.

The Island created an ecosystem for new companies to incorporate and develop their digital asset businesses under the Digital Business Digital Act, legislation created so that those businesses would be regulated by the Bermuda Monetary Authority (BMA) within one of the world’s premier offshore financial centers. Consumer protection is at the top of the BMA’s list when it comes to licensing these businesses.

Digital asset token legislation was introduced to allow companies to incorporate digital asset issuers to conduct their offerings to the public using a relatively straightforward approval process which requires the offering documentation vetted and approved by the Bermuda Ministry of Finance.

Shifting to Insurtech, Bermuda’s Insurance Act was also amended to allow the formation of innovative insurers, which can be one of the two types: (a) those entering a sandbox to experiment with their new technologies before leaving it and (b) those who don’t require that period of experimentation.

Finally, provisions were made to amend the Island’s banking legislation to allow digital asset companies to operate within the jurisdiction. While fairly common in the Far East, crypto banking is still a problematic proposition in the West. As things stand, most banks remain wary and appear not to be interested. But Bermuda is ready when the tides shift.

Progress?

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The Bermuda Government has always acknowledged that the creation of this new economy wouldn’t happen overnight. You hear it all the time.

Much formative work has been created, an example being Circle, a major crypto payment firm which has been granted a full digital asset business license (Class F) by the BMA.

A dedicated Bermuda Tech Week occurred in mid October with a TechBeach Bermuda within it. It was a roaring success for the Island.

The foundation for a Fintech economy has undoubtedly been laid in Bermuda. But has it been laid successfully?

Expectations. In November 2017, the Government announced that the Island was launching itself into the Blockchain arena. Two working groups — a blockchain legal and regulatory working group and a business development working group were formed to assist in developing the ecosystem. I know all too well as I was in both of these groups.

The token offering legislation was drafted swiftly and passed in July 2018. The first Insurtech changes were passed in the same month. The banking legislative changes were pushed through in August. During this process, the Digital Asset Business Act was drafted primarily between the Government and the BMA, so that as soon as the summer break was over, it was passed in September 2018.

The legislation — much of which has now already been updated or is in the process of being amended- wasn’t perfect, but it certainly was a fantastic effort to push the Island into this competitive arena. The process for registering either as a token issuer or as a digital asset business remains a work in progress. Mistakes along the way have occurred.

Rome wasn’t built in a day and Quo Fata Ferunt?

1*KlIRC7pGFDiarRrKidwq9wIn late 2017, the Bermuda Government dived headfirst into the world of digital transformation and committed itself both to looking at the use of Blockchain technology with a view to improving as many sectors of the Island as possible, and also to embracing Fintech generally to bring new business to the Island.

Bermuda’s motto is “Quo Fata Ferunt” — Wherever the fates lead us. One interpretation is that Bermudians can face life as it is, no matter where it takes us. The other, perhaps, is that whatever obstacles we have to confront, we will confront them with endurance and determination. The way Fintech has been introduced, one thing is for sure: Bermuda isn’t merely waiting to see where we may end up, and there is no stopping Bermuda and its determination to become a leading Fintech jurisdiction.1*MPgNZPVY7dduQyeKvUwRng

“Do you take credit cards?”

When did you last hear someone say that? If I had to guess, for most people, perhaps 2 or 3 years ago. Perhaps at a cafe, in a taxi?

But it is unbelievably rare now.

Taking Bermuda, where I live, as an example. Bermuda’s oldest bank, The Bank of N.T. Butterfield & Son Limited, announced a little while back that it had to take the unfortunate action of allowing 30 employees to take early retirement, making 11 employees redundant and closing retail banking services (“walk-in’s”) and drive-thru teller services at one of its branches.

Fintech is the overriding catalyst behind the job cuts. “Walk-up and drive-thru ATMs will remain in place” according to the press release, which also emphasized the Bank adopting a “more automated back office environment.”

First, the “tech” part: technology. People still bank using ATMs (a technology which will celebrate its 50th year anniversary this year) but have increasingly moved online. The growth of online banking is leading to the death of [physical] retail banking. People generally don’t use traditional retail banking services, let alone drive-thru banking any more. Those services that might, you know, involve people.

I just haven’t used a bank teller for… I can’t remember how long.

 

And the “Fin” part — a bank is like any company, and although there are examples of socially responsible companies, most simply are firmly focused on one thing: return to shareholders. As painful as it may be for staff, closures of branches and employee cuts are required to make them leaner and more profitable. In order to compete with other banks and financial institutions, their focus has shifted to creating easier, more flexible online banking services for their consumers.

The Debate

There has been a lot of debate over what can or should be done regarding those individuals who have lost their jobs or taken early retirement. One of the frequent questions: “who will be next”?

The initial statement from Bermuda’s Premier Burt: “the Government will increase our efforts to diversify our banking sector as a matter of national priority.” Diversification must in part allude to Bermuda’s development of crypto banking and digital asset businesses.

Both the Island’s new Digital Asset Business Act 2018 and the amendments to The Banks and Deposit Companies Act 1999 (which accommodates crypto banks to form on the Island) will result in the formation of new licensed entities which will have to have a physical presence in Bermuda and should provide some employment opportunities. Crypto banking and digital asset financing will also develop in Bermuda over time.

1_9mFgmLFaq0KKNMtcz6Kj-Q@2xThe Potential

It is up to the companies themselves within financial sectors to adapt to the new technological pressures that a disruptive, Fintech driven environment creates.

New skill sets can be developed. Retooling and transitioning from traditional banking to Fintech technology can happen but it won’t be easy.

Employees within the existing banks and financial institutions may be able to take advantage of the new opportunities to work in Fintech related areas which are new and exciting, so long as there is a willingness to learn and adapt. These companies can try to re-skill their existing employees, or at least give them the opportunity to work in other, more viable areas within the organization itself.

Potential jobs with “cyber”, “tech” or “data” in their titles may be attractive to those for looking for future employment opportunities, particularly in the cybersecurity sector.

Of course, in addition to the pure financial aspects of Fintech, the increase of automation, artificial intelligence and machine learning are also becoming bigger factors. So is the use of chatbots. As machine learning increases in sophistication, human financial advisors are also being replaced by robo-advisors.

 

1_uCqnn2y2q_Sb5wTiBQp47w@2xThe Reality

So what, realistically, can Bermuda’s Government do to help protect jobs in the financial sector?

Bermuda’s digital asset businesses and crypto banking are being encouraged. The amendments to Bermuda’s Insurance Act to attract new Insurtech companies forming is also helpful, as many new Fintech companies, outside of finance, are in the Insurtech sector.

So, “diversification” will occur. Everything can and will be done to speed up that process. From Bermuda’s perspective, being a leader in the digital asset business sector and a creative force in the crypto banking sector will not just create jobs; the hope is that it will make the Island an innovative, global jurisdiction.

But the reality is: when looking at the disruption Fintech may cause at this current time …. it is really just an impossible question to answer in the short term. It is an impossible question to ask anywhere.

We have an uncertain future full of disruption but one also full of technological efficiency, advancement and promise…. advancement and promise for those who are willing to embrace the possibilities which Fintech may bring.

But those within the traditional financial sector will be under the most pressure to adapt because this kind of disruptive change will hurt. It will hurt those entities who are slow to move and regrettably it will hurt a number of people as a result, no matter what.

This is a disruptive digital revolution which you cannot stop. But you can prepare for it.

 

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