Inevitable pragmatism or a perilous fad? – Artificial intelligence in business
In recent decades, Artificial Intelligence (AI) systems have been taking over human decision making roles in a number of industries, from manufacturing to pharmaceuticals and its impact on the financial sector is now a topical debate gaining traction worldwide.
AI has mostly been welcomed. Its effects on crime prediction, national security and city services have proven to be of great use to national governments worldwide. In Beijing last November, a state backed fund led a $460million investment in a Chinese facial recognition company (Forbes 2017) and since then there has been a surge of investment in AI. From Silicon Valley laboratories to tech giants (Alibaba, Baidu and Tencent) billions of US dollars are now being pumped into complex algorithms, cloud and quantum computing across the public and private sectors.
AI poses a number of fundamental and inherent risks that must not be understated. There are ethical, legal and programming risks that stem from processing high volumes of sensitive data, as well as the risk that global firms (such as the tech giants mentioned above) that exploit first mover advantages, may become monopolistic, erecting barriers to potential new market entrants, thwarting competition in the process.
On the other hand, AI systems can also be used to mitigate business risks, such as cyber-attacks, supplier risks and Fraud. AI systems can be trained to detect, monitor and repel cyber-attacks, the field of AI is still poorly understood and therefore largely underutilised across the finance and service sectors.
Overall, when combined with big data and analytics the information AI is capable of producing is complex, but a powerful catalyst for change. If abused, this information can be destructive, causing detrimental effects on reputation as well as market cap, as recently realised by Facebook founder and CEO Mark Zuckerberg. Only time will tell whether the AI buzz is truly justified. Will the costly investments bear fruit? Or is the trend little more than a speculative bubble waiting to burst?