Who will be the first to implement the new suite of Watson services? From the newly formed Watson Financial Services division, IBM has released the first suite of services covering regulatory requirements, financial crime insights, and financial risk modelling. These cognitive tools have been made possible following IBM's 2016 acquisition of global consulting operation, Promontory Financial Group. Promontory was originally working to provide support to banks dealing with the growing and tightening regulation and risk management within the financial services. It was the knowledge and expertise accessed in this acquisition that brought life to the new financial services-focussed Watson services, with regulation and risk accounting for two thirds of the suite, and a financial crime tool completing the set.
Equbot, the Fund's sub-advisor, is a technology-based company focused on applying artificial intelligence to investment analyses. It is part of the IBM Global Entrepreneurs start-up roster. IBM already has a Watson effort for financial services more broadly, which includes a Watson analytical tool for wealth advisors and wealth management groups, and Watson applications for financial markets analysis. The filing says Equbot will use IBM's Watson AI to perform a fundamental analysis of U.S.-listed stocks and real estate investment trusts based on up to 10 years of historical data and then apply that analysis to recent economic and news data. "Each day, the Equbot Model ranks each company based on the probability of the company benefiting from current economic conditions, trends and world events and identifies approximately 30 to 70 companies with the greatest potential for appreciation and their corresponding weights, while maintaining volatility comparable to the broader U.S. equity market."
Many financial institutions are rapidly developing and adopting AI models. They're using the models to achieve new competitive advantages such as being able to make faster and more successful underwriting decisions. However, AI models introduce new risks. In a previous post, I describe why AI models increase risk exposure compared to the more traditional, rule-based models that have been in use for decades. In short, if AI models have been trained on biased data, lack explainability, or perform inadequately, they can expose organizations to as much as seven-figure losses or fines.
At the end of June and beginning of July, I attended Viva Tech's international summit in Paris. Although the event was centred around Fintech and Insurtech, there were humanoid robots, flying drones, VR play stations… One could learn about the latest trends in retail and hospitality, media and medical industries, smart cities… But, the key idea of the organisers was to physically bring together top companies, investors and startups to boost innovation. There was a series of open innovation challenges designed to hack strategic business problems… In one word, a paradise for a guy like me! I learned a lot, met so many interesting people and interviewed some. One of them was David Kenny, General Manager of IBM Watson tasked to build Watson into "artificial intelligence as a service".
I'm pleased to announce that the IBM Watson IoT Platform now has the ability to add Internet of Things (IoT) data, to Blockchain transactions. Leveraging blockchain for your IoT data opens up new ways of automating business processes amongst your partners without setting up an expensive centralized IT infrastructure. This gives you the potential to improve business networks, reduce costs, increase trust and open up new markets. A solution brief provides an overview of the capabilities and use cases being announced. The new features within the Watson IoT Platform are available through two new Lab Services Offerings.