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A Brief History of Algorithms


ALGORITHMS ARE NOTHING NEW. They date back to antiquity, and were initially developed using variables in mathemat- ics. The Euclidean algorithm, conceived about 300 BC, helped mathematicians determine the greatest common divisor of two integers. The word “algorithm”


even got its name from a ninth-century Persian mathematician, Muhammad ibn Musa al-Khwarizmi, who is considered the father of algebra. His name was later Latinized as Algoritmi, which was itself influenced by the Greek word arithmos (number).


Initially used to solve arithmetic problems through a succession of operations, today algorithms are written in code to be understood primarily by computers, whose power has resulted in an increase in their use, in recent years, to compile and quickly analyze billions of pieces of data. Invented about 20 years ago by Google cofounders Larry Page (right) and Sergey Brin, the PageRank algorithm is the source of the powerful search engine used by billions each day. Facebook’s creation can also be traced


back to an algorithm, which was originally called EdgeRank and later renamed Newsfeed Ranking Algorithm. It sorts through billions of pieces of content and chooses which ones to post on its users’ news feeds, sparking discussions and debates on fake news along the way. US internet guru Eli Pariser wonders why social media platforms such as Facebook and Twitter do not provide users with effective tools to filter their own feeds. “Right now, algorithms control what we see but we can’t control them,” he says. “Users are therefore trapped in a filter bubble.” Algorithms are also said to have been behind the Flash Crash that shook Wall Street in May 2010, wiping out 10%, or US$1 trillion, of stock market value from the New York Stock Exchange. A British trader allegedly used an automated trading program to place a high volume of fake sell orders that pushed down prices. He then quickly cancelled the trades to create the illusion of abundant supply. — PT


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Launched in 1987, in the early days of microcomput-


ing, Croesus is a fintech pioneer. The Quebec SME’s founder, Rémy Therrien, was an engineering physics student at Université Laval at the time. “He was work- ing at a computer store for the summer when he got a call from a trader at brokerage firm Lévesque Beaubien Geoffrion (which would later become National Bank Financial). The trader wanted a soſtware tool to manage clients’ accounts.” For Therrien, that call was the springboard of his business. Thirty years later, the com- pany’s soſtware manages assets valued at $1 trillion. Today, even traditional financial institutions are upgrading to algorithms and new financial technolo- gies. Three years ago, National Bank launched InvestCube, a platform it promotes as a smart, low-cost investment management system. “More and more clients want to take control of their portfolios,” says Robert Girard, senior manager of business develop- ment at National Bank Direct Brokerage. InvestCube allows them to do just that. Based on their profile (con- servative, growth or balanced), investors can access a ready-made portfolio composed of exchange-traded funds, which InvestCube will automatically rebalance up to 12 times a year if necessary (a portfolio is rebal- anced whenever a security deviates by 10% or more from its target allocation, based on the investor’s profile). Since its inception, InvestCube’s six portfolios have generated returns ranging from 3.36% to 15.99%. Algorithms have taken over other industries as well,


including the insurance sector. Since 2013, Desjardins Insurance has been offering the Ajusto telematics program to its Quebec and Ontario clients to help them monitor their driving habits. Provided as a voluntary and free smartphone app since 2015, the soſtware mea- sures driving smoothness (fast acceleration, hard braking and hard cornering), speed, the time of day a driver is normally at the wheel and distance travelled. In return, program members can save up to 25% on their insurance premiums; since the program’s incep- tion, they have seen a 10% to 12% reduction on average. Desjardins says that the data collected by Ajusto cannot be used to penalize insurance clients. “There are very strict privacy policies in place stipulat- ing that the data will never be used to cancel an insur- ance policy, decline renewals or raise premiums,” says Desjardins spokesperson Valérie Lamarre. However, Alain Tapp, associate member of the Montreal Institute for Learning Algorithms, warns that there is always a risk that the information could be used against people. “Those who don’t take part in these kinds of programs could pay the price,” he says. He isn’t the only one with concerns. Telematics has an increasingly large presence in the North American insurance industry. In fact, the Société de l’assurance


40 | CPA MAGAZINE | FEBRUARY/MARCH 2018


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