Growth in Artificial Intelligence
Artificial intelligence (AI) is all the buzz this year. According to CB Insights, as of June 15, this year, more than 200 AI venture financing deals have been completed already totaling $1.5B in dollar volume. If the latter half of the year continues at this pace, 2016 will be a record year. 2015 saw 397 AI venture financings totaling $2.3B. Based on analysis by CB Insights, most of the deals being done are at a series B or C stage, indicating that startups in this space are beginning to see success.
AI, as most people now know, has several applications in health technologies, marketing & sales, business analysis and financial services. Not surprisingly, these are also some of the most data-rich sectors and functions. And data is the life-blood of AI. Adrian Lawrence, Partner at Baker & McKenzie expects access to data to play a central ro
le in the scope and impact of AI systems, noting that “Data, and the various rules and processes which both enable and regulate access to and use of that data, stand at the heart of disruptive fintech businesses. Even the most advanced and intelligent algorithms and models are useless without efficient, secure and legal access to detailed, accurate and up-to-date data sets.” Without accurate and sufficient data, artificial intelligence becomes a garbage-in, garbage-out proposition.
Automation vs. Artificial Intelligence
While businesses in major sectors are eager to embed artificial intelligence into their processes and services, there have been some exaggerated claims about the usage of artificial intelligence. Companies are using automation to create efficiency and accuracy in business processes. Automation and artificial intelligence are terms that have been thrown around interchangeably by some business people, but there is a distinction. Automation is about replacing mostly repetitive tasks, with machines. Automation has been in heavy use in factory processes for almost a century. Software has also automated many tasks such as matching data records, looking for exceptions and making calculations. Artificial intelligence is about replacing human decision making with more sophisticated technologies. These are not repetitive tasks, but rather judgment-based work which requires a more complex set of algorithms and machine learning which can use a variety of inputs to recognize patterns, predict future outcomes and make decisions.
The fintech sector is starting to use artificial intelligence in several ways. Most recently, the California-based robo-advisor, Wealthfront, has added artificial intelligence capabilities to track account activity on its own product and other integrated services such as Venmo, to analyze and understand how account holders are spending, investing and making their financial decisions, in an effort to provide more customized advice to their customers. Sentient Technologies, which has offices in both California and Hong Kong, is using artificial intelligence to continually analyze data and improve investment strategies. The company has several other AI initiatives in addition to its own equity fund. AI is even being used for banking customer service. RBS has developed Luvo, a technology which assists it service agents in finding answers to customer queries. The AI technology can search through a database, but also has a human personality and is built to learn continually and improve over time. The technology is being evaluated to understand its potential to directly interact with customers.