How AI will Impact Growth Strategies in Financial Services- Part 1
There are many tailwinds right now, US growth in 2017 was 2.3% and is projected to be 2.5% in 2018 and Japan is growing at 1.3%. Europe is finally is projected to grow significantly with both Merkel and Macron making it easy for businesses to grow. India and China are both enjoying healthy growth, lower than expected but still robust while they are making significant reforms. Here in the US we have historically low unemployment and while there is argument that labor force participation is not at year 2000 levels, I would argue that many people are not working full time as they have other sources of income. So, all in all, there is robust growth globally and now the economists say the risks are mainly political.
In this environment of high growth and low unemployment, at least at home in the US, there is an interesting phenomenon occurring: similar to the widening gap between the wealthy and the middle class, there is an evolving, but significant gap in the skills of the haves and have nots of many industries. There is a breed of entrepreneurs, bankers, asset managers and most importantly technologists that have continued to build their experience and skills – while some of them are millennials, there are many who are in their 40’s and 50’s and at the peak of their careers and capabilities. Workers with a good understanding of technology, finance, management and leadership skills have become very advanced in their capabilities and have left the common person far behind. While some have become experts as Malcolm Gladwell put it: once you spend 10,000 hours on something, you actually get pretty good at it and able to start companies, launch products, motivate thousands, leaving many behind.
So how do companies that are increasingly relying on these skills that are scarce, looking to grow organically? As inorganic growth has now become expensive in an environment of globally rising asset prices and higher inflation.
I suggest they turn to AI. Developments in Machine learning, Deep Learning and the science of extracting insights and knowledge from large sets of data has developed dramatically over the last 2 years – and it is not a coincidence that according to Domo “90% of all the data in the world has been generated over the last two years.”This combination of ability to get data sets (NLP, voice recognition, the general digitization trend) combined with ability for code to give insights based upon both pattern-recognition as well as “learning” from different data and experience is a dramatic development and one that can provide the fuel needed for companies to grow.
Yes, skeptics may say that Machine learning is not new – it was used in World War II by Alan Turing to break the German code. But was data or technology freely available to all in those times? We now have many sources of data and a large amount of data, computers have almost become free (facilitated by cloud computing), and languages like Python and AIML have come up which facilitate rapid proto-typing and trial and error to make robust applications. Many platforms are also open-source to increase the accessibility. In the end, will the computer replace the brain – in my view – in some ways it will surpass it and work much faster.
How do companies use this AI for their organic growth? That is going to be in my next post, Stay Tuned!
ABOUT THE AUTHOR
Jayesh Punater is a successful Entrepreneur, Investor, Fintech Strategist and Thought Leader. He focuses on bringing innovative technology and business models to the fintech industry. Currently he is the Executive Chairman of First AI, a machine learning platform for credit investments.
Mr. Punater founded Gravitas from his apartment in 1996 and the business organically grew under his leadership to a global firm of 275+ employees, providing Collaborative Outsourcing (his pioneered model) and a full front-to-back outsourcing platform to clients managing more than $1.2 Trillion in
AUM. In 2017 Gravitas was sold to a publicly listed firm.
He is on the Advisory Board of Thales, Advisory Board of Turner Investments, a member of the Economic Club of NY, a member of C2C which is a peer CEO club. Mr. Punater is a graduate of Arizona State University with a BSEE and a minor in Economics and has also taught an entrepreneurship MBA class at Fordham University. He enjoys traveling, swimming, chess, practicing mindfulness and visualization. Mr. Punater lives in New York City with his wife who is a mindfulness ninja and coach and two sons who are 10 and 7 years old.
WORKS CITED
The Japan Times. (2018). World Bank estimates Japan's growth in 2018 at 1.3%, down from 1.7% estimate for 2017 | The Japan Times. [online] Available at: https://www.japantimes.co.jp/news/2018/01/10/business/economy-business/world-bank-estimates-japans-growth-2018-1-3-1-7-estimate-2017/#.WmSE_ahl9PY [Accessed 21 Jan. 2018].
Amadeo, K. (2018). What Will the Economy Do in 2018 and Beyond?. [online] The Balance. Available at: https://www.thebalance.com/us-economic-outlook-3305669 [Accessed 21 Jan. 2018].
Labmate-online.com. (2018). How Much Data Does the World Generate? Labmate Online. [online] Available at: https://www.labmate-online.com/news/microscopy-and-microtechniques/4/breaking-news/how-much-data-does-the-world-generate/43778 [Accessed 21 Jan. 2018].
