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IACS symposium and the Chavez talk on financial engineering

The Institute of Applied Computational Sciences at Harvard’s Paulson School  of  Engineering and Applied Sciences sponsors a Winter Compufest each year during  January. I have reported on the previous fests of “Markov Centennial” and  “Computing at Exa Scale” in these pages. This year it featured the keynote talk of  “Data, Dollar, and Algorithms” given by the treasurer of the Goldman Sachs,  the famed investment bank,  Dr. Martin Chavez who is a computer science Ph.D from  Harvard and Stanford.

He said :

1.    the main business of firms like Goldman Sachs is to “take, match, and source  RISKS of all kinds” to facilitate commerce. A prime example is the risk  of crude oil price and the finished gasoline price for airlines.

2.    1/3 of the employees at GS are scientists/engineers and not financial types.

3.    GS maintains huge databases of financial data in petabytes and growing  exponentially. But these data enables tremendous saving in digital financial  transactions. It use to take 50 million dollar to finance a start up but only 3 million now  to do the same. NYSE use to require 600 traders to handle certain stock business  but now only requires two persons.

4.    Application Program Interface (API) is a big business and gradually eliminating humans  for large financial transactions to be handled automatically (i.e., different financial  programs  and data bases talk to each other without human intervention  and translation). He gave the example of UBER (taxi business) that directly uses  the Amazon  system called AWS.

5.    GS is planning to get into the consumer loan business via their product called MARCUS.

My own take away from his talk: How “computing” is changing the nature of employment in the  financial business as well as elsewhere (see my previous article “…in the future… http://blog.sciencenet.cn/blog-1565-1027626.html  ”. Young persons  about to enter society take note.