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Digitizing Intelligence: AI, Robots and the Future of Finance – IIF

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Article Synopsis :

Collapsing computing costs, exponential growth in data, and intense competition between deep-pocketed companies are delivering breakthroughs in artificial intelligence (AI). “Digitizing Intelligence: AI, Robots and the Future of Finance” from IIF is a comprehensive look at AI across the full spectrum of financial services.

 The Digital Insurer reviews IIF’s Report on Digitizing Intelligence: AI, Robots and the Future of Finance

Technology companies own the upper hand on AI but legacy insurers are joining the fray to maintain share and stoke innovation  

The report discusses AI along the following categories (with salient points from each):

Big Data

  • The digital universe is doubling in size every two years
  • Explosion in data combined with cheap computing is driving robust industry growth, to $84.69b in 2026 from $34b today

AI Activities and Applications

  • AI startup financing activity has grown at a CAGR of 100% between 2011 and 2015
  • Tech companies heavily invested in the space include IBM, Google, Amazon, Facebook and Samsung
  • Finance companies investing in the space include Goldman Sachs, Schwab, Bridgewater and Renaissance Technologies

Reporting

  • AI software has made significant strides towards generating natural language reports
  • By automatically transforming data into narratives AI software dramatically reduces the time and energy people spend analyzing, interpreting and explaining data, also writing reports for things such as regulatory compliance

Advising Institutional Investors

  • A common view shared by many analysts in the industry is that a sophisticated trading machine capable of learning and thinking will make even today’s most advanced and complex investment algorithms look primitive
  • Advisory bots are already allowing companies to evaluate deals, investments, and strategy in a fraction of the time it takes today’s quantitative analysts using Excel

Corporate Decision Making

  • Digital environments could help companies improve decision-making processes, produce corporate strategy at lower cost, and transform management styles
  • Such tools increase the speed at which company decisions can be made and reduce error rates and human biases based on emotion and irrational and imperfect knowledge in the decision-making process

Robotic Bankers

  • The Bank of Tokyo-Mitsubishi UFJ introduced its first humanoid robot, NAO, in Tokyo in 2014. The 58-centimer (23-inch) machine can speak nearly 20 languages and read human emotions and welcomes customers to the branch, directing them to the proper department
  • This allows bank employees to concentrate on higher-value work
  • Mizuho and other banks are following suit

Personal Financial Management

  • “Smart wallet” mobile applications evaluate an individual’s financial profile and spending and saving activity to deliver real-time and on-location advice to “help consumers make smarter decisions about their money, especially when they’re out spending it”
  • A new category of “virtual banking specialists” is emerging, tailored to help individuals understand their unique spending patterns in real-time

Regtech

  • Many financial firms are urgently seeking technological solutions to address regulatory and compliance costs more efficiently and effectively
  • Because the work performed around compliance is frequently repetitive with enormous amounts of information, it is ideal for AI-based solutions

Other Applications

  • Alternative lending
  • Translation for international clientele
  • Cybersecurity

The adoption of AI technology by the finance industry will lead to growing regulatory, security, privacy, accountability and social concerns. Liability issues, worker displacement, and concerns about the rise of AI itself (Elon Musk refers to AI as “summoning the demon”) are fully discussed.

Link to Full Article:: click here

Digital Insurer's Comments

Growing interest in AI in financial services is partially attributable to the potential threat posed by technology companies. It’s plausible for tech firms to expand into broader financial services, leveraging their own technical expertise, innovative and integrated platforms, extensive customer data, loyalty among millennials, and lighter regulatory environments. Many insurers, understanding this reality, own the view that AI poses more threat than opportunity for the sector.

But the the fact is insurers investing in AI are better positioned to provide customized, high-quality products and services to clients, reduce errors and operational costs, automate complicated tasks, and improve decision-making and the standardization of process workflows.  As all of these beget increased profitability, stronger growth and market expansion, we believe AI is far too compelling to ignore.

Link to Source:: click here

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