FINANCE TODAY | ISSUE NO.01
WHAT IS AI?
Artificial intelligence (AI) is intelligence demonstrated by machines and it promises to revolutionize human-machine interaction. When machines become intelligent, they can understand requests, generate insights by connecting data points, observe, reason, plan, and learn at rates that dwarf that of a human (Thompson et al.). Artificial intelligence is made possible by machine learning, deep learning, and neural networks. These disciplines within the domain of computer science focus on the use of data and algorithms to mimic the way humans learn. This data can come in many different forms such as pictures, text, spreadsheet data, audio data, or video and these can be fed into algorithms that are then trained through the use of various statistical methods to make classifications and predictions (IBM, 2021). With its humble beginnings in military science and statistics in the 1960s, researchers found that the unique number crunching properties of computers could be leveraged for advanced modeling long before it found its way into big tech applications like that of Google (NASDAQ:GOOGL), Apple (NASDAQ:AAPL), and Amazon (NASDAQ:AMZN) (Thompson et al.). This paved the way for the automation and superhuman-like reasoning that we see in computers today.
HOW IS AI TRANSFORMING BUSINESS
Demand for artificial intelligence is steadily increasing and as data becomes the main driver behind informed, pragmatic decision-making in business, companies are beginning to see the strategic use for AI in their respective industries. Below are just a few places where deep learning algorithms are being applied to improve the efficiency and quality of business processes:
- Speech Recognition: also known as Automatic Speech Recognition (ASR) or speech-to-text, is a process that converts human speech into a written text format through the use of a capability known as Natural Language Processing (NLP). Many companies that design smartphones and smart appliances use speech recognition in their “smart assistants”, namely Apple’s Siri and Google Assistant (IBM, 2021). The hands-free nature of this technology enables those of us who are differently-abled to access many of the features that smartphones provide and hands-free technology also reduces potential distraction for those who are required to maintain focus (i.e uber drivers).
- Customer Service: we see online chatbots that replace the customer service agents who would typically be contacted along the customer’s journey. Their purpose is to answer FAQs around topics such as shipping and can provide personalized advice or cross-sell products, further improving customer satisfaction and changing the way we approach customer engagement in the internet age. Examples of this technology include messaging bots on e-commerce sites with virtual agents, within messaging apps such as Slack and Facebook Messenger, and tasks usually done by virtual assistants and voice assistants (IBM 2021).
- Computer Vision: This AI application allows computers to use information from digital images, videos, and other visual inputs to derive meaningful insights and even take action as a result. Powered by a capability known as convolutional neural networks, computer vision has applications in radiology imaging in healthcare, photo tagging on social media, and self-driving cars in the automotive industry (IBM 2021).
- Automated Stock Trading: Designed to optimize portfolio performance, AI-driven high-frequency trading platforms can make thousands or even millions of trades per day without human interaction, saving financial management companies time, money, and resources (IBM 2021).
AI MARKET DOMINANCE
The global artificial intelligence market size was valued at USD 62.35 billion in 2020 and is expected to expand at a compounded annual growth rate (CAGR) of 40% from 2021 to 2028 (Grand View Research, 2021). Software solutions led the AI market and accounted for more than 38% share of the global revenue in 2020. Software market dominance is largely due to improvements in information storage capacity, high computing power, and parallel processing capabilities (Grand View Research, 2021). When viewing AI relative to the industries it impacts, the advertising and media segment led the market and accounted for more than an 18% share of the global revenue in 2020, with the healthcare sector anticipated to gain a leading share by 2028. In the BFSI segment which includes financial management and investment/portfolio management services, artificial intelligence has seen widespread use due to the high demand for risk and compliance applications (Grand View Research, 2021). Key players in the global AI market are taking several strategic initiatives, such as mergers and acquisitions, partnerships, and collaborations with other major companies in order to achieve a competitive edge. Below are some of the prominent players operating in the artificial intelligence market:
AI AND ETHICS
Although the advent of AI brings with it a plethora of revolutionary applications in areas like business, finance, manufacturing, healthcare, data analysis, and more, it is important to acknowledge that this great power comes with responsibility. Given that an essential facet accelerating the rate of innovation in the field of AI is accessibility to historical datasets, the quality of the data inputs directly impacts the accuracy and efficacy of outputs. In order for the benefits of artificial intelligence to be maximized on a global scale, trust, a uniquely human characteristic, is required. In the past, experts have raised concerns about inherent bias in AI systems such as facial recognition software in which case, accidental racial or gender bias in data may have contributed to unintended discrimination amongst particular groups of individuals (Choudhury, 2021). Trust is fundamental in adopting any new technology, but its importance is magnified by the potential for unintended secondary and tertiary effects to have adverse impacts on the people who these technologies are intent on helping. A set of global rules, regulations, and trust principles are required such that the negative consequences of implementing this technology are minimized (Choudhury, 2021). Wonki Min, the current president at the State University of New York, Korea said “ if companies fail to meet the ethical standards set around AI, they would not survive in the marketplace.” (Choudhury, 2021). This sentiment rings true throughout the market as a whole since the widespread use of social media and continued push for operational transparency has thrust organization’s ethical practices (or lack thereof) into the limelight.
THE FUTURE OF AI
In artificial intelligence’s current state, it has exceptionally adept capabilities in narrow fields of expertise. For example, Alpha Zero – an AI created to play Chess and Go – far exceeds the skill level of traditional human players; however, humans certainly have artificial intelligence beat by our sheer breadth of knowledge in a wide variety of different subjects and we can attribute this power to evolutionary and biological factors. As far as AI research goes, the ultimate goal is Artificial General Intelligence (AGI) which many experts say is a long way off (Choudhury, 2021). That being said, it is clear that right now in 2021 we are in the age of artificial intelligence and it will continue to grow and permeate various industries. As AI continues to develop, further ethical questions will be raised and widespread regulation imposed such that the best interests of humanity are maintained.
Choudhury, S. R. (2021, July 15). Building ethical A.I. products can put businesses at a competitive advantage. CNBC. https://www.cnbc.com/2021/07/15/building-ethical-ai-products-can-put-businesses-at-competitive-advantage.html
Grand View Research. (2021, June). Artificial intelligence market Size Analysis report, 2021-2028. Artificial Intelligence Market Size Analysis Report, 2021-2028. https://www.grandviewresearch.com/industry-analysis/artificial-intelligence-ai-market.
IBM Cloud Education. (2021, July). What is machine learning? IBM. https://www.ibm.com/cloud/learn/machine-learning.
Thompson, W., Li, H., & Bolen, A. (n.d.). Artificial intelligence, machine learning, deep learning and more. SAS. https://www.sas.com/en_ca/insights/articles/big-data/artificial-intelligence-machine-learning-deep-learning-and-beyond.html.