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Finance in a Changing World

The Promise and Perils of Technology - Artificial Intelligence, Big Data, Cybercrime and FinTech
The Promise and Perils of Technology - Artificial Intelligence, Big Data, Cybercrime and FinTech
Salzburg Global Seminar 
The “Fourth Industrial Revolution” is fundamentally changing society, economies and financial markets on a global scale. Significant and often disruptive technological developments such as artificial intelligence (AI), robotics, big data and distributed ledger technologies (DLT) have led to the digitization of assets and information, the emergence of new players, business models and ecosystems, as well as new ways of interaction between individuals and businesses. While these changes potentially increase productivity and growth, they may also trigger new risks for today’s market participants and society.  How are these technological developments impacting and challenging society and financial markets? What consequences do they imply for policy, regulation and practitioners? What measures should be taken to mitigate the potential risks associated with the impending technology-triggered transformations? These questions and more faced the policymakers, banking and securities regulators and supervisors, and cybersecurity and data experts who gathered in Salzburg for the annual meeting of the Salzburg Global Finance Forum. The 2018 program focused on The Promise and Perils of Technology: Artificial Intelligence, Big Data, Cybercrime and FinTech. The subsequent report offers valuable insights: The rapid and often disruptive development of technological advances – from AI and robotics to big data and distributed ledger technologies – is fundamentally changing the financial landscape by altering the interaction between customers and providers of financial services, lowering the barriers for new entrants, and enabling the emergence of new business models and ecosystems.  Banks have to adapt to the new competitive environment by becoming trusted custodians of clients’ financial data while at the same time intelligently analyzing clients’ data and behavior to anticipate needs and deliver tailor-made solution by collaborating with financial as well as non-financial partners.  Key internal challenges are the acquisition of talents to achieve the perfect combination of core banking skills with tech-savvy innovative capabilities, as well as the mitigation and management of cyber risk.  The emergence of new players and business models, as well as an increased disintermediation of the value chain of financial institutions, also create new challenges for policymakers and regulators.  Activity- and principle-based regulation appears to be the most suitable approach forward to balance consumer and investor protection on one hand and the facilitation of financial innovation on the other, and to provide a technology-neutral level playing field for incumbents and new entrants.  Download the report (as a hi-res PDF) to read more The report also features: The opening remarks of the program’s two co-chairs – J. Christopher Giancarlo, chairman of the US Commodity Futures Trading Commission (CFTC) and José Manuel González-Páramo, member of the board of directors and chief officer for global economics, regulation and public affairs at BBVA in Madrid, Spain; An interview with the keynote speaker, Hal Varian, the chief economist at Google; and  A list of all participants in attendance and the Salzburg Global Finance Forum’s Advisory Committee.
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Hal Varian – Data, like oil, needs to be refined in order for it to be useful
Hal Varian speaking at Salzburg Global Seminar
Hal Varian – Data, like oil, needs to be refined in order for it to be useful
Maryam Ghaddar 
For decades, science fiction films and books have foretold of a future where robots dominate the world, where human action becomes obsolete, and subsequently, human intelligence dwindles into oblivion. Hal Varian, the chief economist at Google, is of a different mindset. He believes technology will set its own course. “My theory is,” he jested, “we want to make sure robots think humans are cute - kind of like doggies and puppies and kitty cats… because if they think we’re cute, then they’ll take care of us.” Varian, who attended this year’s program of the Salzburg Global Forum on Finance in a Changing World on the recommendation of a friend, has worked at Google since 2002 on algorithm designs for auctioning and marketing systems, as well as policy-related issues, like privacy and intellectual property. During the Finance Forum, titled The Promise and Perils of Technology: Artificial Intelligence, Big Data, Cybercrime and Fintech, he presented a keynote speech on the economics of artificial intelligence (AI). More specifically, he explained the economic implications of data on education, the workforce, research and development, and demographics. Varian later elaborated on this point, saying data needed to be turned into information, knowledge, and action to be coined as meaningful. “I think there’s a mystical belief in the power of data,” he said. “Data is like oil in one respect… namely, it needs to be refined in order to be useful. So the data itself is not the important components, the know-how to refine it into something that’s useful. It’s the same [when] we talk about oil or data – it’s just the raw material, it’s not the finished product.” When it comes to considering what the Fourth Industrial Revolution will look like, it’s easy to fall into the trap of fearing the unknown. The societal response to this radical revolution, whether it concerns technology, big data, or mass industrial change, is one massive question mark. Varian suggested past industrial revolutions occurred gradually, and then all at once, adding there were challenges and risks involved but then also a plethora of opportunities. He suggested it will be similar this time around. “In Silicon Valley, they always say you overestimate what can be done in a year; you underestimate what can be done in ten years. So a lot of technology that looks so exciting and so obvious today will probably take many years to deploy… The mobile phone has come up as an example. The first working mobile phone was in 1970; the first commercial version was in 1980 – it cost over a thousand dollars, it weighed several [kilograms], it was the size of a brick. So, that technology took… more than a decade to really disseminate in a meaningful way.” The chief economist offered another example that cropped up several times over the course of the Finance Forum: autonomous vehicles. For years, companies worldwide have been endeavoring to circulate driverless cars more widely. It is, as Varian underlined, “a trillion-dollar industry” that works on a mobile and a technological level, but human error and human behavior have thus far been too strong a poison against its operational and marketing advancement. Preserving the human spirit in the face of such technological developments is essential to maintaining the situation in the future. “Demography is destiny,” Varian said. He described a concept of “Bots & Tots,” which essentially pins automation against procreation. Whereas age distribution is indicated through demographics, technology is not as widely understood. “We don’t really know where we’ll go, even in three [or] five years; it’s hard to forecast what will happen in that time period. But, based on the estimates that I’ve developed using the demographic data and various forecasts of the technology data, it looks like the demographic data is the bigger effect, at least for the next ten or 15 years.” Regarding education and labor, he said, “We are a long way away from truly intelligent robots, but at the same time… we’ve seen tremendous advances in just the last five years about tasks that were thought to be extremely difficult, like image recognition and automatic translation and voice transcription… I think that within the next two years, your mobile phone will be able to translate in real time… that doesn’t mean that translators would entirely disappear because there are still cases where the translator might need to know special vocabulary, technical work, physics, chemistry, mathematics, or specific literary skills.” So how do we prepare for this new industrial revolution adequately and in a purposeful way? With the Finance Forum taking place directly after the Salzburg Global Board of Directors Gala Weekend titled Who’s Afraid of Artificial Intelligence?, Varian offered his input on the topic, stressing both the benefits and dangers of these changes. “You certainly shouldn’t be blasé,” he noted. “You should recognize that every technology can be misused… There are tremendous possibilities for improvement in how people live, but they also can be used as weapons, and that’s not even thinking about the technological advancements. That’s simply taking ordinary devices that you would use every day – a car, a truck, a drone perhaps.” His time at Schloss Leopoldskron provided Varian with the opportunity to exchange ideas and viewpoints with others in the field of economics and finance. “You learn things here,” he concluded. “Having these meetings… plus government meetings, plus institutional meetings, that’s what makes the world go round.” If Varian could leave his fellow participants with one piece of wisdom, what would that be? “Keep an open mind.” The Salzburg Global Forum on Finance in a Changing World convenes an internationally representative group of leaders from financial services firms, supervisory and regulatory authorities, and consultancies, auditors, law firms and other professional service providers in a small and intimate setting. The annual gathering at Schloss Leopoldskron offers private and public sector leaders an opportunity for in-depth, off-the-record conversations on the issues affecting the future of global markets. For more info please click here.
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Leaders from Financial Institutions Reflect on Transformations in Banking and Technology
Leaders from Financial Institutions Reflect on Transformations in Banking and Technology
Maryam Ghaddar 
Stephen Hawking once said, “Intelligence is the ability to adapt to change.” When we look at the future, change is inevitable. In the field of finance and economics, this could be a cause for concern, but it could also be a cause for celebration. At this year’s Salzburg Global Forum on Finance in a Changing World, senior leaders and rising specialists sat down to consider the rapid transformation of the finance sector.     Around 70 participants from 18 countries gathered earlier this month at Schloss Leopoldskron in Salzburg, Austria, for a three-day program titled The Promise and Perils of Technology: Artificial Intelligence, Big Data, Cybercrime and FinTech. Topics centered around the risks of the “Fourth Industrial Revolution” on banking policies and trust, as well as the implications on economies and societies at large. Reflecting on the meeting, Tatsiana Lintouskaya, a program director at Salzburg Global Seminar, said, “We had a great group of participants and a perfect set of topics around technological transformation in financial services. The program offered both a high-level view of technology-driven opportunities and risks and concrete insights on specific issues to inform and aid senior industry leaders and policy-makers in advancing their work and shaping a future in which technologies improve the world for all.” On the first day of the program, participants considered the importance of data and the economic characteristics of artificial intelligence (AI). They considered the relationship between machine learning and data, as well as aspects of competition, research and development, and the labor market with respect to robots and job losses. A fireside conversation on the impact of technology transformation on economies and societies prompted participants to consider how the ‘Fourth Industrial Revolution’ will reshape societies, economies, and industries, the amount of technological change societies can absorb without unwanted social disruption, and how policy-makers can shape and channel technological forces. The Forum included several panel discussions dealing with the financial landscape and opportunities in the new technology era. These panels underpinned financial institutions in transformation and the cultural and structural internal challenges they face. Participants held informal debates on how policymakers and regulators should respond to the rapid technological innovation and complexity of financial institutions, particularly where the current legal frameworks are concerned. They also addressed the emerging cyber and data security threats to the financial system. In addition to these lively panel discussions, participants also broke into five in-depth working groups to discuss varying degrees of technology with regards to the finance sector. On the last day of the Forum, the groups convened as one to report on their findings and exchange perspectives. The first group considered the possibilities cloud computing offered to accelerate the digital transformation of the banking sector. The group’s members agreed cloud computing is critical to the banking infrastructure and acknowledged the need to deal with cyber risks. Their collaborative next steps involved bringing supervisors together to adopt cloud computing to ensure financial stability and find a balance between corporate governance and technical risk. The future of the workforce in financial services has often been cause for concern when considering advances in technology. What skills are missing in the industry? How can financial services position themselves in the labor market? What are the policy implications? These are questions which the second group posed during their discussions. Their main takeaways included a plan to change the skills profile of the existing workforce and set up proper rules that clearly state the need for tech-savvy employees and a more tech-friendly work environment. Trust, flexibility, and inclusivity are significant factors in implementing standards for intelligence sharing, as indicated by the third group. They deliberated on a global approach to fighting cybercrime and identified multinational and operational models of coordination in organizations. The fourth group discussed the data infrastructure needed in the new technology era and questioned who will own the data, who should use it and how? Their conclusions centered on consent, control, and traceability of data. This offered a smooth segue to the fifth and final group’s topic: transparency of artificial intelligence and robotics in finance. They emphasized AI is capable of reconstituting people in areas such as race, age, and gender. The biggest challenge is engineering AI systems to deliver in non-discriminatory ways. Humans, as members explained, are the least transparent, but in-depth dialogue and trust are essential for enabling positive technological change. The Salzburg Global Forum on Finance in a Changing World convenes an internationally representative group of leaders from financial services firms, supervisory and regulatory authorities, and consultancies, auditors, law firms and other professional service providers in a small and intimate setting. The annual gathering at Schloss Leopoldskron offers private and public sector leaders an opportunity for in-depth, off-the-record conversations on the issues affecting the future of global markets. For more info please click here. #s3gt_translate_tooltip_mini { display: none !important; }
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The Promise and Perils of Technology: Artificial Intelligence, Big Data, Cybercrime and FinTech
The Promise and Perils of Technology: Artificial Intelligence, Big Data, Cybercrime and FinTech
Maryam Ghaddar 
Human and machine. Where do we draw the line and what is the point of intersection? Senior leaders and rising specialists in the fields of financial services and technology, banking, cybersecurity and data analysis will gather at Schloss Leopoldskron for the annual Salzburg Global Finance Forum to discuss the radical technological implications of the “Fourth Industrial Revolution” on the banking sector. The multi-year series was founded in 2011 to convene international representatives to discuss outstanding issues in the future of financial markets, as well as global economic growth and stability. This year’s intensive two-day program – titled The Promise and Perils of Technology: Artificial Intelligence, Big Data, Cybercrime and FinTech – will see participants exploring the risks and opportunities of technological transformation through panel discussions, plenary sessions, working groups, and an Oxford-style evening debate. Forum co-chair Christopher Giancarlo, Chairman of the US Commodity Futures Trading Commission (CFTC), said, "This year is the 70th anniversary of Salzburg Global Seminar. It is also the 70th anniversary of the world's first stored-program computer, ‘the Manchester Baby,’ that ushered in the modern computer era.  As we embark upon the next generation of computational technology, it is fitting that we gather at Schloss Leopoldskron to consider the promise and perils of the accelerating pace of digital transformation." Fellow Forum co-chair Jose Manuel Gonzalez-Paramo, Executive Board member of BBVA, also offered some insight ahead of the meeting. He said, “Massive adoption of digital technologies, changes in consumer behavior and new business models are radically reshaping the world, profoundly changing personal relationships, business organizations and, in general, the way economic value is created. Facing this new era with chances of success will require ambition and broad-mindedness from both the public and private sector.” Taking place directly after Salzburg Global’s June Board Meeting, which highlighted similar issues as part of its program, Who’s Afraid of Artificial Intelligence?, the Finance Forum will ask participants to consider how prominent technology is in reshaping societies, economies and industries and how much technological change societies can withstand before severe social disruptions begin to surface. What divisions arise from such change? How can policymakers channel these forces to achieve public policy objectives like prosperity, competition, financial inclusion, etc., as well as prepare societies and citizens adequately? Participants of the 2018 Finance Forum program will examine the future of financial systems with respect to the opportunities and competitive landscapes created by ever-advancing technology forms. As of yet, this revolution is a sea of uncharted territory with innovations in the organization and analytic power of artificial intelligence, distributed ledgers, big data, cloud computing, and the commercial use of information, among others. No system is perfect. The adjustments required to hone these unpredictable and potentially dangerous technologies must have monitoring mechanisms in place to contain the inevitable attendant risks. Gonzalez-Paramo added, “In the current context of disruptive change, two forces will be fundamental for determining the speed of change and the future of the financial sector. The first, which is internal in nature, concerns the banks’ vision of the future and their strategic, technological, financial and organizational capacity for self-transformation. The second is the role of the regulators and supervisors as drivers of or brakes on the changes needed during the transition.” With big data comes great responsibility. We find ourselves in a labyrinth of legal challenges and protection laws throughout the world. Threats to the functioning power and smooth delivery of financial markets have become ubiquitous, just as data-driven institutions and concerns about cyber-security, privacy, data exchange and digital identity theft are increasingly apparent. The Forum will address these issues, as well as deliberate how the data ecosystem should evolve, as well as maintain a balance between privacy and information sharing, given international regulations in this area. FinTech and RegTech companies have both done their parts in transforming the design and delivery of financial services and undertaking the daunting task of ensuring regulatory compliance. Innovating payment methods, lending strategies, asset management, insurance policies, and the potential for open banking offer powerful tools that could increase accessibility of financial services. However, it is also essential to ramp up defenses against cyber-crime and convey prosecutions as visible deterrents. The Forum aims to foster peer-to-peer learning and exchange across regions, institutions, and generations. Salzburg Global will connect leading tech minds across the financial industry as they produce a framework of sustainable development in education, public services and investment that will act as an agenda for societies to adopt. A synthesis report on the program will also be disseminated to a broad community of Finance Forum Fellows and stakeholders later in the summer. The Salzburg Global Forum on Finance in a Changing World convenes an internationally representative group of leaders from financial services firms, supervisory and regulatory authorities, and consultancies, auditors, law firms and other professional service providers in a small and intimate setting. The annual gathering at Schloss Leopoldskron offers private and public sector leaders an opportunity for in-depth, off-the-record conversations on the issues affecting the future of global markets. For more info please click here.
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Salzburg Global President's Report 2018
Salzburg Global President's Report 2018
Louise Hallman 
“How does a relatively small but influential NGO help shape a better world? That is the question Salzburg Global Seminar set out to answer as we entered our 70th anniversary year,” explains Salzburg Global President & CEO, Stephen L. Salyer in this year’s edition of the Salzburg Global Chronicle.  Founded in 1947, Salzburg Global Seminar has the mission to challenge current and future leaders to shape a better world. Our multi-year program series aim to bridge divides, expand collaboration and transform systems.  Features This year’s edition of the Salzburg Global Chronicle puts forth this renewed mission and strategic framework of the 70-year-old organization through a series of features and mini profiles of our Fellows and their projects. A Positive Space in a Polarizing World From Students to Statesmen Combined Efforts, Maximum Effect  From Ideas to Impact Radical Reinvention From Local to Global Campaign The Chronicle also announced the launch of Salzburg Global’s largest-ever fundraising campaign. Inspiring Leadership: The Campaign for Salzburg Global Seminar will seek to raise $18 million over the next three years to expand our scholarship program, invest in developing innovative solutions to complex problems and secure this organization and our historic home of Schloss Leopoldskron for generations to come.  “Campaigns are about vision. They support critical, compelling and transformational priorities,” states Salyer. “The Campaign Inspiring Leadership  — gift by gift, investment by investment — will empower people, policies, and placemaking that can transform the world.”  For the Love of Humankind From Scholarships to Schloss Renovations Yearbook Now in its fifth year, this year’s Chronicle is for the first time accompanied by a “Yearbook.” As Clare Shine, Salzburg Global Vice President and Chief Program Officer explains: “Our 2017 Yearbook draws these rich strands together. It provides an overview of our activities and partnerships in Salzburg and around the world, highlighting our multi-year program goals and the concrete outcomes driving short and longer-term impact. We wish you good reading and look forward to working with you in the future.” Download the Yearbook (PDF) You can read all the stories and download both sections of the 2018 President’s Report on the dedicated webpage: www.SalzburgGlobal.org/chronicle/2018 
 
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Salzburg Global Board Member Andreas Dombret Recognized for his Services to Austria
Andreas Dombret (left) is presented with the Great Golden Medal for Services to the Republic of Austria by Governor Ewald Nowotny (Photo: Niesner/OeNB)
Salzburg Global Board Member Andreas Dombret Recognized for his Services to Austria
Oscar Tollast 
Salzburg Global Seminar board member Andreas Dombret has been presented with a prestigious medal honoring his services to Austria. Dombret, a member of Deutsche Bundesbank's executive board, has been awarded the Große Goldene Ehrenzeichen für Verdienste um die Republik Österreich (Great Golden Medal for Services to the Republic of Austria). He was presented with the accolade earlier this month by fellow Salzburg Global board member, and Governor of Oesterreichische Nationalbank (OeNB), Ewald Nowotny, at the Oesterreichische Nationalbank in Vienna. Governor Nowotny, who has served as a board member for Salzburg Global since November 2008, said, "Andreas Dombret has been closely associated with Austria for many years and is distinguished by his strong commitment to Austrian interests. This is particularly helpful in those international bodies where Austria is not directly represented, such as the Basel Committee on Banking Supervision or the G20." Dombret has been a member of the executive board of the Deutsche Bundesbank since May 2010. He is responsible for directorates general banking and financial supervision; economic education, University of Applied Sciences and technical Central Bank cooperation; risk control; and the Bundesbank's representative offices abroad. As a representative of the Bundesbank, Dombret has taken part in numerous international committees and has used this opportunity to represent Austria's interests. Dombret has been a board member for Salzburg Global since January 2016.
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Salzburg Global Explores How Radical Technology-Driven Changes are Impacting Financial Markets and Economies
Salzburg Global Explores How Radical Technology-Driven Changes are Impacting Financial Markets and Economies
Salzburg Global Seminar 
Salzburg Global Seminar helped cap off the Securities Commission Malaysia’s (SC Malaysia) latest World Capital Markets Symposium with a candid conversation on how technology is changing the financial services industry. The program, which took place immediately after this year’s World Capital Markets Symposium, was convened by Salzburg Global and the SC Malaysia at the Hotel Mandarin Oriental in Kuala Lumpur. Guest speakers included Benjamin Glahn, vice president at Salzburg Global; Masamichi Kono, deputy secretary-general at the OECD; Douglas Flint, former chairman of HSBC and a member of the Salzburg Global Forum on Finance Advisory Committee; Junko Nakagawa, executive vice president, executive managing director and chief risk officer at Nomura Asset Management; and David Wright, chair of EUROFI, a partner at Flint-Global, former secretary general of IOSCO, and a member of the Salzburg Global Forum on Finance Advisory Committee. Around 40 securities regulators, investors, bankers, and market practitioners engaged in the program and were welcomed by Ranjit Ajit Singh, chairman of the SC Malaysia. Following Singh’s remarks, Glahn, Kono, Flint, Nakagawa, and Wright engaged in discussion and debate about the topic of the 2018 Salzburg Global Forum on Finance in a Changing World, The Promise and Perils of Technology: Artificial Intelligence, Big Data, Cybercrime, and FinTech. The annual Forum, which is off-the-record, takes place at Schloss Leopoldskron, in Salzburg, Austria each June. Public and private sector thought leaders are invited to take part in the two-day gathering, which focuses on issues critical to the future of financial markets and global economic growth and stability, and aims to stimulate important conversations on major trends unfolding across today’s financial landscape, including their implications and the responses they necessitate. The 2018 Forum will assess how radical technology-driven changes may impact societies, economics and financial markets around the world, what this means for policy, regulation, and practitioners in the short and longer term, and how technology can be utilized positively. Speaking after the discussion, Benjamin Glahn said, “This was a highly engaging panel and debate, and I would like to extend our sincere thanks to the Securities Commission Malaysia and Ranjit Ajit Singh for co-hosting this panel at the conclusion of a very successful World Capital Markets Symposium. I would also like to express our gratitude to each of our panelists who shared their time and expertise following the conclusion of the World Capital Markets Symposium. “Artificial intelligence, big data, cryptocurrencies, fintech, and cybercrime heavily featured in this year’s World Capital Markets symposium, and in the discussion afterward there was an interest to engage in this area further. It’s critical for us to understand the implications and responses to the changes taking place in global financial markets, and everyone agreed that the 2018 Forum on Finance in a Changing World will be a perfect place to continue these discussions in June.”

View full set on Flickr The Salzburg Global Seminar session, The Promise and Perils of Technology: Artificial Intelligence, Big Data, Cybercrime, and FinTech, will take place at Schloss Leopoldskron, Salzburg, Austria, between June 24 and June 26, 2018. For registration information, please click here.
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