The problem with AI bias

Ai has come a long way. Just after WW2, there was a preconception that developing Artificial Intelligence would lead to something like an ‘Attack of the Zombie Robots’, and that AI could only be a bad thing for humanity. Fortunately we have come a long way from the old sci-fi view of AI, and we even have robotics used in surgery, but there is still a lingering feeling that AI and robotics are threatening in some way, and one of those ways is ‘bias’.

AI is very much part of the fourth industrial revolution, which also includes cyber-physical systems powered by technologies like machine learning, blockchain, genome editing and decentralised governance. The challenges that we face in developing our use of AI, are tricky ethical ones for the most part, which need a sensitive approach.

So, what is the issue? As James Warner writes in his article on AI and bias,

“AI is aiding the decision making from all walks of life. But, the point is that the foundation of AI is laid by the way humans function.” And as we all know — humans have bias, unfortunately. Warner says, “It is the result of a mandatory limited view of the world that any single person or group can achieve. This social bias just as it reflects in humans in sensitive areas can also reflect in artificial intelligence.”

And this human bias, as it cascades down into AI can be dangerous to you and me. For example, Warner writes: “the investigative news site Pro Publica found that a criminal justice algorithm used in Florida mislabelled African American defendants as high risk. This was at twice the rate it mislabelled white defendants.” Facial recognition has already been highlighted as an area with shocking ethnic bias, as well as recognition errors.

IBM suggests that researchers are quickly learning how to handle human bias as it infiltrates AI. It has said that researchers are learning to deal with this bias and coming up with new solutions that control and finally free AI systems out of bias.

The ways in which bias can creep in are numerous, but researchers are developing algorithms that can assist with detecting and mitigating hidden biases in the data. Furthermore, scientists at IBM have devised an independent bias rating system with the ability to determine the fairness of an AI system.

One outcome of all this may be that we discover more about how human biases are formed and how we apply them throughout our lives. Some biases are obvious to us, but others tend to sneak around unnoticed, until somebody else points it out. Perhaps we will find that AI can teach us how to handle a variety of biased opinions, and be more fair ourselves.

Do we need credit card rewards?

This topic may resonate more with North American readers than with Europeans, the latter being not quite so obsessed with credit card rewards. I came across an article in Forbes by Alan McIntyre on this topic, which made me pause to think about the future of cards and rewards, and whether this rather old-fashioned system will survive in a more fintech-led financial system.

For some time Americans have been receiving bonuses for spending on their cards. They have come to expect these ‘gifts’. Of course all this comes at a cost to the credit card companies. According to new research from Accenture, rewards spending by the top five credit card issuers grew to $31 billion in 2018, up from $11 billion in 2015.

McIntyre suggests that the cash-back Apple card might be “the peak of card rewards” and that this entire system is on its way out. As he also mentions, card companies are having to figure out how to deal “with a less attractive volume-value trade-off.”

At the moment the payments industry is still on the winning side with the trade-off, as its revenue has grown by $50 over the last three years. It’s worth somewhere around $300 billion and it is expected to grow 4% by 2025.

However, the American payments industry is lagging a bit behind the rest of the world in this respect. In Europe and Asia, the consumer payments sector is moving to “high-volume, low-margin payments,” and “many of those are moving over account-to-account payment rails rather than over the card networks.” Here’s why it’s changing. In Asia, for example, it costs a merchant only 0.5% on average to accept an Alipay payment, while credit card payments in the U.S. can still be over 2% for many merchants.

The pressure on the North American payments industry to shift over to this model will come from the merchants. The consumer is less likely to change, because they love getting those rewards when they spend with their card. But that significant percentage difference in cost to the merchant is a big deal.

McIntyre says that recent research shows, “We are already seeing merchants begin to favoor debit over credit as a lower-cost payment mechanism, and favouring their own loyalty schemes rather than relying on those run by the card-issuing banks.”

And he says there are two other factors that will end rewards: “The first is the belated development of real-time payments in the U.S. and the opportunity it provides for merchants to have lower-cost payments that will be even cheaper than debit transactions.”

The second major driver of change will be “the continued internalization of payments by major retailers to avoid having to pay merchant acceptance fees at all.” Starbucks, Walmart, Uber and Amazon are the frontrunners in this system.

It seems unlikely to me, thinking over all this, that the old North American credit card rewards model will last for much longer. But I do think that whilst the merchants may be the driving force of this change, there will also be a need for consumer education, so that they understand why their rewards have been taken away.

What has the Internet of Things changed?

First of all, let me give you a definition of the Internet of Things. Wikipedia describes it thus: “The Internet of Things (IoT) is a system of interrelated computing devices, mechanical and digital machines, objects, animals or people that are provided with unique identifiers (UIDs) and the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction.”

The IoT has a lot of applications, including the smart home and care of the elderly, as well as in healthcare, transport, manufacturing and agriculture, as well as on military battlefields. The ‘smart city’ is another IoT driven creation. Drones are an IoT baby, as are some of the latest artificial organs. The possibilities are seemingly endless, but let’s take a look at some of the areas where it has already had an impact.

Healthcare

The Proteus Pill tracks the influence of each pill taken: the time, the content, and a body’s specific reaction. It allows doctors to discover which medications work, or don’t, with individual patients, making for more accurate prescribing.

Logistics

International courier company DHL uses IoT tools to track and monitor deliveries. It uses sensors to track shipment containers, protect them, and collect data on workers and the adopted tools. In return, the company is more efficient and costs are reduced.

Transport

Virgin Atlantic launched and IoT connection with its Boeing 787 plane to predict possible health and equipment problems and improve flight safety. It shouldn’t be too long before other airlines adopt it.

Agriculture

Drones have great potential in agriculture, and they are the most multifunctional and reliable Internet of Things technologies. In particular, they are capable of taking pictures of huge areas of land, and can analyse soil composition and watering problems, as well as detecting plant diseases. Some believe that the use of IoT in agriculture will be one of its most important uses.

Education

Smart learning is on its way thanks to IoT. From adjusting the space within a university campus to creating a personalized study plan, IoT in combination with AI and machine learning changes the level of satisfaction with learning significantly.

Wildlife Conservation

LionGuardians is an example of IoT at work in nature. Its technology is an open source wildlife tracking collar system designed specifically for saving animals threatened with extinction. Currently being used in southern Kenya, it is hoping to protect and save 2,000 lions left in the area — by tracking their location and sending notifications to coordinators via SMS in case assistance is needed.

Cities

The Smart City is another fascinating use of IoT. Barcelona is already on board with it and has 500 km of optical fibre network, Wi-Fi routed in street lighting, air quality monitoring and water consumption sensors, smart parking and smart waste management. It makes life more comfortable for citizens and more cost effective as well.

The IoT is already changing our world, and it has much further to go.

Who will be Top Dog in Digital Currencies?

Digital currencies have been popping up like daisies over the last several years and there doesn’t seem to be an end to it. Some might say that it would be more accurate to compare them to weeds and that an awful lot of them need to be removed from the cryptocurrency environment.

It is certainly true that there are questions marks over the long-term survival of a significant number of them. Brad Garlinghouse, the Ripple CEO, thinks that around 99% of digital assets will “got to zero”. And there are many others who agree with him, even if they don’t put a precise figure on it.

Now the survival of what I might call the ‘smaller’ coins is even more in question, because central banks are moving into the digital asset arena with their own digital currency, and this will put a lot of pressure on all but the strongest cryptocurrencies.

Mati Greenspan, senior analyst at eToro remarked to Charles Bovaird at Forbes: “At the moment the three biggest currencies in the world are racing to make their fiat digital.” In this race, China is winning, because the European Central Bank and the Federal Reserve haven’t put in the effort to keep up. Then we add something like Libra into the mix and for a time it looked like Facebook’s digital coinage had the potential to threaten every other cryptocurrency,. Now, that project looks less certain to be such a major threat.

So what is the likely outcome? Some market observers believe that whatever happens, there won’t be a winner-take-all scenario. Jacob Eliosoff, a cryptocurrency fund manager thinks there will be around 100 widely used cryptocurrencies that will survive. Marouane Garcon, managing director of Amulet said, “There won’t be a single currency because of too many political differences in the world, but just like fiat currencies some will be stronger in value than others.”

Furthermore, bitcoin, which is currently the leading digital currency, may not be the ultimate winner, but it is likely to be in the winning group. Jake Yocom-Piatt from Decred had this to say: “Instead of a large amount of capital and attention spread across many currencies, we will increasingly see that same capital and attention spread across a smaller number of SOVs, leading to a corresponding increase in their value.”

Who do you think will win the race to be Top Dog in this race? The central bank coins, stablecoins like Libra, or bitcoin and its peers?