In this webcast, Wayne Eckerson discusses the impact of artificial intelligence (AI) and machine (ML) learning on the finance industry, specifically how AI/ML will lead to augmented intelligence, in which man and machine collaborate to deliver optimal outcomes and decisions. Watch the webinar on this link: https://www.youtube.com/watch?time_continue=506&v=UwBEd_m0XBs

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AI for Financial Services:
Man Versus Machine Intelligence
December 2018
Wayne Eckerson
Principal Consultant
Eckerson Group

2. © Eckerson Group 2017 Twitter: @weckerson www.eckerson.com
Artificial intelligence
“A machine that performs tasks that normally
require human intelligence, such as visual
perception, speech, dialogue, learning, and
decision making.
Turing Test, 1950
Automated
attendants
Credit
Scoring
Smart
lights
Roomba
Robot
Google
search
Gaming
robots
Fraud
Detection
GPS
directions
Spam
filters
Mobile
Deposits
Computer
GUI
Inbox filtering
and alerts
Digital
Assistants
Biometric
access controls
Autonomous
vehicles
1970s 2020s
Goal is CONVENIENCE: saves time, money, and effort
AI in Everyday Life

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Drivers
Big Data
Processing
power
Machine
algorithms
Business
maturity

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Use Cases for AI
AI Use Case
Standard
Process
Business
Constraint
Deep
Data
Source: “Intelligent Process Automation: The Engine at the Core of
Next-Generation Operating Model” – McKinsey
Business/technical
know how

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Dimensions
Artificial Intelligence
A
Rules
If, then, else
Machine Learning
Supervised
learning
Unsupervised
learning
Deep Learning
Artificial
Neural
Networks
Generative
Adversarial
Networks
• Expert systems
• Robotic process
automation (RPA)
• Natural language
generation
• Training data
• Labeled data
• Classification
• Regression
• Decision Trees
• Unlabeled data
• Clustering
• Segmentation
• Anomaly
detection
• Dueling neural
networks
• Self-learning
• Generates
realistic photos
and videos
Reinforcement
learning
• Self-learning
agents
• Markov decision
process
• Operations
research
• AlphaGo champ
• Mimics neural
networks
• Natural language
processing (NLP)
• Image recognition

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Automated
Processes
Augmented
Intelligence
Autonomous
Intelligence
Evolution of Intelligence in Financial Services
• Automatic teller machines
• Robotic process control
• Mobile claims processing
• Fraud detection
• Cybersecurity
• Risk management
• Automatic trading
• Automatic underwriting
• Robo Advisors

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Man Versus Machine
To optimize decision making….. YOU NEED BOTH!
Humans validate and tweak machine output Machines generate initial insights
OPERATIONAL DECISIONSSTRATEGIC DECISIONS
MachineMan

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Robo Advisors
Bulk personalized emails after market correction.Evaluate risk tolerance; manage emotions
BIONIC ADVISOR ROBO-ADVISOR
Better for small, investors and young, tech savvy
individuals.
Better for large investors and older, less tech savvy
individuals.

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”The core value of the robo-advisory services lies in the automation of back-office
tasks. Tasks that are mundane and routine are made more cost and time
efficient... It allows the advisors to allocate more time to building and maintaining
relationships with their clients that would have otherwise been consumed with the
routine tasks.
The human touch is crucial in a fully-automated wealth management process,
because it is the behavioral coaching that sets advisors apart from robo-advisors.”
From, “What is Bionic Advisory?” http://www.bionicadvisory.com/blog/what-is-bionic-advisory
The Future of Wealth Management

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Application MACHINE MAN
Fraud Detection Detect anomalies at scale Evaluate anomalies, especially over
certain dollar amount; record
outcome;
Cybersecurity Detect anomalies at scale Evaluate anomalies; record outcome
Underwriting Set rates automatically based
on predefined criteria
Handle complex and more expensive
policies
Intelligent bots Schedule meetings, record
complaints, recommend actions
Handle exceptions when bot doesn’t
know what to do
Augmented Intelligence

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Autonomous Intelligence
Anomaly detection
Root cause
analysis
Remediation
Autonomous Detection Autonomous Prediction
Forecast
What-if
Analysis
Optimization
Alerts Recommendations Benchmarks
Autonomous Analytics on Aggregated Usage Data

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Benefits Challenges
Benefits and Challenges

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Benefits Challenges
Benefits and Challenges

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Benefits Challenges
Fear
Control
Transparency
Trust
Value
Cost savings
Agility
Productivity
Benefits and Challenges

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• AI is automation technology
– Automate routine operations and decisions
– Reduce drudgery, costs, manual labor
– Improve worker productivity and insights
• AI won’t replace humans
– Only repetitive, routinized jobs
– AI augments human intelligence
– Humans will handle exceptions, complexities, strategy
• However, AI will get smarter….
– As it learns an environment and its variables
– … but life and business is messy and ever changing
– “Shut that thing off!”
Summary

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Wayne Eckerson
• 25+ year thought leader in data and analytics
• Sought-after speaker and consultant
• President, Eckerson Group
• Former director of research at TDWI
• Author of hundreds of articles and reports
Performance
Management
BI/Analytics

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