How AI and Big Data Impact the Structure of the Financial Industry

The video discusses the rapid changes in the financial industry due to AI, machine learning, and big data. It highlights how these technologies have altered market structures, particularly in consumer finance, by changing loan pricing and credit scoring. The use of personalized data has made loans cheaper for those with good credit but also allows financial companies to target less sophisticated customers. The video also explores the implications for monetary policy, noting that while interest rates are set by the Federal Reserve, the way they affect consumers can vary based on how companies use data to charge customers.

Explain how the evolution of the FICO score has influenced lending practices over the years.

What role does the Federal Reserve play in regulating the impact of big data on interest rates?

How does the understanding of the cost of capital affect consumer behavior towards credit cards?