The global investment banking industry is worth a few hundred billion dollars annually, as are both the audit and legal professions. And since the last decade or so, increased regulation has forced banks to devote around 10% of their salary costs to employing an army of compliance controllers to ensure that their transactions and processes meet the standards required by the law. And the stakes are high. Rogue traders, breaches of confidentiality, and reckless financial positions can expose financial institutions to fines, cripplingly negative publicity, and even prison sentences, not to mention huge financial losses. These stakes are what make banks the earliest adopters of many technological innovations.
Big data, the Internet of Things, and artificial intelligence hold such disruptive power that they have inverted the dynamics of technology leadership. When science and technology meet social and economic systems, you tend to see something akin to what the late Stephen Jay Gould called "punctuated equilibrium" in his description of evolutionary biology. Something that has been stable for a long period is suddenly disrupted radically--and then settles into a new equilibrium.1 1.See Stephen Jay Gould, Punctuated Equilibrium, Cambridge, MA: Harvard University Press, 2007. Gould pointed out that fossil records show that species change does not advance gradually but often massively and disruptively. After the mass extinctions that have occurred several times across evolutionary eras, a minority of species survived and the voids in the ecosystem rapidly filled with massive speciation.
"Just as 100 years ago electricity transformed industry after industry, AI will now do the same." Artificial Intelligence – it's on the lips of the leaders, and on the 2018 agendas of the board meetings, of almost every global company today. Directors and operating executives alike know, or think they know, that this "new electricity" is going to be the next transformative force of our world. To ignore it now could be fatal to their long-term competitive position, not to mention survival. AI-powered companies that know what they are doing -- primarily born in the Internet and mobile eras – have not only gained tremendous advantage in improved efficiency and increased profitability, they have literally changed the competitive landscape of successive industries.
If nothing else, AI continues to climb the technology hype curve. It was impossible to read the news, browse the web, attend a conference, or even watch television without seeing a reference to how AI is making our lives better. Since Alan Turing declared "what we want is a machine that can learn from experience" in a 1947 lecture to the London Mathematical Society, the imaginations of computer scientists and engineers have run wild with visions of a computer that can answer questions on par with a human. Today, almost everyone in business is looking at how to leverage AI, and there is no shortage of vendors looking to capitalize on the trend. Venture Scanner currently tracks more than 2,000 AI startups that have received more than $26 billion in funding.
When Google abandoned the Chinese search market over government censorship in 2010, it seemed a remarkably principled act of self-sabotage. The company's decision to return to China today, by establishing a new AI research center in Beijing, is all about safeguarding its future. The center was announced at an event in Shanghai today by Fei-Fei Li, a prominent AI researcher and the chief scientist at Google Cloud. With the announcement, Google is acknowledging the growing importance of China for the future of AI. It is also setting the stage for a battle over who gets to deliver AI to the rest of the world.
Professor of Artificial Intelligence Wolfgang Faber comments on Google announcing that its AlphaGo Zero artificial intelligence program has triumphed at chess against world-leading specialist software within hours of teaching itself the game from scratch and considers where humans will start losing their jobs to intelligent computers and machines. "'Google's'superhuman' DeepMind AI claims chess crown' has been a headline on the BBC recently. What does it mean, and are our jobs, or even our lives in danger? First, let us have a look at what caused this headline: A few days ago, a manuscript by a group around David Silver, Thomas Hubert, and Julian Schrittwieser of London-based, Google (or rather Alphabet)-owned DeepMind was uploaded to arXiv, in which the system AlphaZero is described and very impressive results in learning how to play three traditional board games (chess, shogi, Go) well are reported. The setup allowed for learning very successful (superhuman) strategies in a few hours only.
IBM is ready to open the doors to the first customers for its commercial quantum-computing services. Sometimes the most profound solution is to change the entire problem. JPMorgan Chase, Daimler, and Samsung will be among the first group of businesses to gain access to IBM's new 20 quantum bit (qubit) IBM Q quantum system to help uncover commercial, industrial and scientific quantum computing applications. While IBM is playing catchup with artificial-intelligence breakthroughs made by Google, Microsoft, and Amazon, it has taken a lead in the race to build a practical quantum computer thanks to its recently demonstrated prototype 50-qubit processor. The companies joining the IBM Q Network gain access to the 20-qubit system, which is capable of producing qubits with a record 90 microsecond'coherence', the time a single qubit -- representing both 1 and 0 simultaneously -- survives in this state before dissolving into a conventional bit's single state of either 1 or 0. That means 50 qubits can represent more than one thousand trillion values.
We have had many previous hype cycles around AI. As I wrote in Silicon Collar: "Since the 1950s! That is when Alan Turing defined his famous test to measure a machine's ability to exhibit intelligent behavior equivalent to that of a human. In 1959, we got excited when Allen Newell and his colleagues coded the General Problem Solver. In 1968, Stanley Kubrick sent our minds into overdrive with HAL in his movie, 2001: A Space Odyssey.
This post is authored by Vani Mandava, Director of Data Science at Microsoft Research. The AI revolution is poised to unleash unprecedented innovation and impact on our society. Several research and development groups across Microsoft have hit their stride in delivering world-changing impact through the power of AI. Working together, we are creating a comprehensive Microsoft AI platform and a set of AI services that will enable the next generation of intelligent applications that will augment human intelligence. The AI buzz has been impossible to miss at numerous conferences that Microsoft has participated in during the past year.
Open any business publication or digital journal today, and you will read about the promise of AI, known as artificial or augmented intelligence, and how it will transform your business. The fact is, AI will not only transform your entire business, whether you are in health care, finance, retail or manufacturing, but it will also transform technology itself. The essential task of information technology (IT), and how we measure its value, has reached an inflection point. It's no longer just about process automation and codifying business logic. Instead, insight is the new currency, and the speed with which we can scale that insight and the knowledge it brings is the basis for value creation and the key to competitive advantage.