JIAM Director Keiichi Aritomo talked about his views and potentials of latest technology and how it can transform finance for a publication “Fintech Initiative 2030”, co-produced by Keio Univ and KPMG Japan.
1) Blockchain – possibility of disrupting supply chain finance/trade finance
Trade finance has been a stronghold for banks because of the labor intensive/paper intensive nature and the need for a big back-office to handle it..
The paper work can be replaced with blockchain and it would no longer require a big army. As trade finance can be a very attractive investment product (high liquidity and high return) we might see more asset managers and hedge funds entering this classic business with the use of blockchain.
2) AI and “radical transparency”
AI has not changed that much over the last 20 years. It cannot build hypothesis or stories which human brains can do. But it is strong at digging out facts and build logic to support them. Using the strengths of humans and AI, one new consensus building method is “radical transparency” which is practiced by star hedge fund manager Ray Dalio and his team. All his team members including Ray will present their hypothesis and everyone and AI will evaluate them. A junior associate can be commenting to Ray “your vision is already 20 years old!” – it is a process which eliminates internal politics and hierarchy from decision making.