5 things we learnt at Camp Alphaville

The FT’s live event took place in the City last Wednesday. A fascinating day of debate, discussion and interviews on a wide range of financial and broader economic and societal topics, here are five highlights we picked out in particular:

The FT’s live event took place in the City last Wednesday. A fascinating day of debate, discussion and interviews on a wide range of financial and broader economic and societal topics, here are five highlights we picked out in particular:

Learning the lessons from Enron

Andrew Fastow, reformed former Enron “chief loophole officer” (CFO to me and you), gave a moral masterclass on the slippery slope which can lead to business ruin and in his case, prison. The lessons of the Enron scandal in Houston 2001 rang particularly true in the City of London in 2015. As financial institutions continue to struggle with the reputational legacy of the financial crisis they should be mindful of  Andrew’s advice. No amount of regulation will reform a system if the culture remains unchanged. 

Finance comes out of its shell

The diversity of attendees at Camp Alphaville was particularly notable. Undoubtedly, this has much to do with the Alphaville’s team’s occasionally offbeat writing style and eclectic interests attracting a loyal band of readers from a wide variety of professions. However, it is also indicative of a more general broadening of financial services away from the previously closed and homogenous world of grey suits in large corporations. The ever-increasing concatenations of financial services, technological disruption and macroeconomic changes have forced the sector to look outside of itself, while also drawing the attention of a new band of nerds, futurists, geeks and hackers. 

AI is either under-appreciated or overhyped

One of the first panel discussions asked the question of when can we expect true AI and what will it deliver. As it turns out, that’s a hotly contested view. In one camp are the optimists who believe true AI (“level of a mouse or rat cognitively speaking”) will be with us in no more than 20 years. Its ability to solve maths, physics and medical problems holds great potential. Skynet worriers shouldn’t be concerned either apparently. On the opposite side of the street are the sceptics, who to quote one panel member describe AI as “too dominated by marketers” and marred by “too much wasted money”. We need a reality check on what AI can really deliver they argue. Time to make up your own mind.  

A European capital markets union can’t come soon enough

Alphaville’s multi-national panel debate on the future of the Euro had exactly what you would expect. Italian passion, German pragmatism and no consensus to be seen. Is the crisis in Greece one caused by economic incompetence or political intransigence? Is the Eurozone’s diversity a source of financial robustness or a fundamental weakness of the single currency? The answers will help to shape Europe’s future, but there was consensus on one issue. The capital markets union can provide much needed funding for European businesses and cushion the region from future shocks. It’s now up to Lord Hill to deliver. 

Lord Hill

Lord Hill has a mandate to deliver a European Capital Markets Union

Source: OGL, The British Government

Whither big data?

Much hype surrounds big data, but the speakers at Alphaville were keen to inject some realism into the debate. Economist Diane Coyle was at pains to point out that the principles of social research and statistical analysis are more important than ever. Simply ‘mining’ for correlations in large data sets can generate all kinds of spurious results. Meanwhile, the lack of a theoretical framework or qualitative knowledge is prone to reinforcing existing prejudices. As the limitations of Google Flu Trends exposed, big data does not necessarily mean “true” results. Moreover, when such analysis is being used to inform political and business decisions, the consequences are potentially dangerous. With the rise of wearables, panellists also raised the potential harm. For insurers, there is an obvious incentive to knowing the activities of their customers. The representative of Vitality implied this was a completely voluntary arrangement – customers have the choice to track their gym visits and exercise in return for a discount to their policy. Yet if the choice is between having your every movement tracked and paying exorbitant premiums or going without insurance, there may only be one option.

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