Thursday, March 8, 2012

GAME CHANGER: Citigroup Hires IBM's Watson Computer

Source: IBM
This is big news for the financial industry and could disrupt jobs on Wall Street. IBM's Watson computer, which "is built on IBM DeepQA technology for hypothesis generation, massive evidence gathering, analysis and scoring" and "applies advanced natural language processing, information retrieval, knowledge representation and reasoning, and machine-learning technologies to open-domain question answering" (IBM's definition), was just hired by Citigroup. This is what business school grads will be competing against. From Bloomberg:

"Watson can comb 10-Ks, prospectuses, loan performances and earnings quality while also uncovering sentiment and news not in the usual metrics before offering securities portfolio recommendations. It can also monitor trading, news sources and Facebook (FB) to help a treasurer manage foreign exchange risk."

Last November, after watching the PBS documentary on Watson's Jeopardy challenge, where it defeated two champions (video below), I wrote about IBM's Watson and Boston Dynamics' PETMAN humanoid robot, which, combined, could be a Terminator. Is there a way to put Watson's brain in PETMAN's head? There would be no need for human labor at that point. Here is the official IBM/Citi press release from March 5, but, more importantly, read what Manjoj Saxena, General Manager of IBM Watson Solutions, sees Watson doing in the financial services industry going forward (bold emphasis mine).

"It’s too early to talk about Citi’s plans in detail, but here are some scenarios we envision for Watson, in general, in the financial services industry:

Financial advisers could capture a holistic view of a client’s situation in life, their tolerance for risk, and the best outcomes, based on past performance, of people in the same demographic and psychographic groups. From this information, banks could anticipate the needs of their customers. They’ll be able to stage three-way conversations, including Watson, to help their clients explore questions deeply and make sound decisions.

Institutional sales representatives could gather a whole new level of insights that help to form their recommendations on trades, contracts and negotiations on behalf of their clients. Watson would digest everything from traditional analyst reports to SEC filings to blog posts—which no single individual could read and digest on her or his own. If an earthquake strikes a heavily industrialized region of the world, Watson will be able to quickly size up the impact on any number of industries.

Loan officers could be able to query Watson for evidence that an applicant for a commercial loan or credit card is not who they say they are, or has aliases or relationships with other people that might signal a high potential for fraud. They’ll be alerted by the system if a case they’re handling violates bank rules."

Amazing. I can't wait to read Watson's financial blog. IBM has a youtube channel reserved for Watson. Below is "The Science of an Answer" segment followed by Watson beating everyone in Jeopardy. It is also interesting that IBM's stock hit $200 for the first time ever a few days ago (split adjusted).





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