Operations & Technology OPERATIONS & TECHNOLOGY CONFERENCE & EXHIBITION SEPTEMBER 11-13, 2017 THE WESTIN CHARLOTTE CHARLOTTE, NC

Transcription

1 Operations & Technology OPERATIONS & TECHNOLOGY CONFERENCE & EXHIBITION SEPTEMBER 11-13, 2017 THE WESTIN CHARLOTTE CHARLOTTE, NC Conference and Exhibition The Future is Here: Do You Have the Tools Necessary? September 11 13, 2017 The Westin Charlotte Charlotte, North Carolina HANDOUTS

2 What is Cognitive Computing? & What are Financial Services Firms Doing With It? Wes Helms Watson Financial Services Solutions

3

4 Games Provide a Laboratory for Reasoning

5 Technology is driving the evolution and creation of new business models in Financial Services Technology forces Cognitive & Analytics Blockchain Robotics & Automation FinTechs & Digital Internet of Things Cloud Security are creating new experiences Experience journey Digital ubiquity Omnichannel and disrupting operational models. Traditional value chain Ecosystem

6 The digital explosion of content makes it impossible for humans to make sense of it all TODAY UNSTRUCTURED DATA STRUCTURED DATA 5

7 Cognitive is the new competitive advantage.

8 7 AI = Augmented Intelligence

9 Cognitive computing is about amplifying human cognition.

10 Cognitive systems are not programmed. They learn their behavior through training.

11 Cognitive systems are creating a new partnership between humans and technology Humans excel at: common sense (but with many biases), morals, imagination, compassion, dilemmas, abstraction, dreaming, generalization, expertise Cognitive systems excel at: Locating knowledge, natural language, pattern identification machine learning, eliminating biases, providing endless capacity 10

12 What are some problems that a cognitive business is ideally suited to solve? Data How to keep up with the mountains of contextual data available to you, even when most of it is unstructured in format How to keep up with the mountains of contextual data available to you, even when most of it is unstructured in format Volatility Complexity How to overcome and solve for great complexity by giving the skill and knowledge of the informed few to the empowered many 11

13 A cognitive business has systems that can enhance digital intelligence exponentially. With abilities to see, talk and hear, cognitive systems interact with humans in a natural way. They can reason, grasp underlying concepts, form hypotheses, and infer and extract ideas. Learn Interact Understand Reason Cognitive systems understand imagery, language and other unstructured data like humans do With each data point, interaction and outcome, they develop and sharpen expertise, so they never stop learning. 12

14 Analytics is evolving in sophistication to now encompass Cognitive What happened? How many, how often, where? What exactly is the problem? What actions are needed? Analytics Sophistication What could happen? Simulation What if these trends continue? Forecasting What will happen next if? Predictive Modelling How can we achieve the best outcome? Optimization How can achieve the best outcome and address variability? Stochastic Optimization Cognitive Artificial Intelligence A branch of computer science dealing with the simulation of intelligent behavior in computers Machine Learning The study and construction of algorithms that can learn from and make predictions on data Deep Learning A branch of machine learning based on a set of algorithms that model multiple layers of neural networks Descriptive Analytics Predictive Analytics Prescriptive Analytics

15 Some common AI concepts: Natural Language Processing (NLP) is a core function for parsing and identifying significant words in language Machine Learning is a class of statistical techniques that use training data to recognize the correlation between a set of feature patterns and outcomes Cognitive Systems leverage machine learning to predict meaning in features of human language (spoken, written, visual) and related forms of human reasoning Deep Learning is a rapidly maturing space, based on neural network techniques, that are taught to find their own features Artificial Intelligence the theory and development of computer systems able to perform tasks that normally require human intelligence, such as visual perception, speech recognition, decision-making, and translation between languages. Uses Annotators to identify significant words Increasingly used to extract Entities and Relationships into Knowledge Graphs Often rule-based, but a growing focus on statistical techniques Enables the prediction of other similar outcomes given a similar pattern of feature values Often associated with the problem of identifying the weak signals in the noise that indicate meaningful patterns Reasoning strategies often employ high-dimensional feature spaces A lot of work goes in to identifying and refining appropriate features Generally very high dimensional, fed with an arbitrarily high number of primitive signals and left to sort itself out through training data and reinforcement Reasoning, Knowledge, Planning, Learning, NLP (communication), perception and the ability to move and manipulate objects Machine mimics "cognitive" functions that humans associate with other human minds, such as "learning" and "problem solving

16 IBM s Principles for the Cognitive Era Purpose Transparency Skills Augment human intelligence Based not only on principle, but also on science Embedded in the processes, systems, products and services by which business and society function all of which will and should remain within human control When and for what purpose AI is applied in cognitive solutions The major sources of data that inform solutions and the methods to train Work with our clients to protect their data and insights, and encourage others to do the same Work to help people acquire skills and knowledge to engage with cognitive systems For new work and jobs that will emerge in the cognitive economy 15

17 Watson has become a set of Cognitive services available on IBM Bluemix for clients to enable in their apps Language Speech Vision Data Insights Conversation Document Conversion Natural Language Classifier Tone Analyzer Speech to Text Visual Recognition Alchemy Data News Alchemy Language Language Translator Retrieve & Rank Personality Insights Text to Speech Tradeoff Analytics

18 Watson Conversation Create natural language interactions with the customer, including Q&A and onboarding. Deploy wherever you want. Integrate bots into messaging channels, mobile, web, robots etc. Walk customers through business processes, e.g. application forms or resetting a password. Incorporate deep learning and advanced machine learning capabilities with minimal expertise or coding. Enhance your app with complementary Watson APIs for Empathy and Speech to give it more human-like qualities. Watson Virtual Agent - Pre-built content out-of-the-box, pre-trained for customer self-service. 20

19 Watson provides tools to enable custom business domains What is the rust grade? Sounds like Company names Product names Medical terms Drug names Industry terms and more 21

20

21

22

23

24 Cognitive Customer Care Personalize every interaction Conduct conversations Provide assurance

25 Watson Financial Services Solutions Radically improving client processes with three levels of value & business models Process Clouds Business Process as-a-service Risk & Compliance Counter Fraud Industry Solutions Solutions-as-a-Service $ Payments Client Insight & Engagement Development Marketplace Developer workbench, micro-services

26 TODAY $ $ $ $ $ $ $ $ $ $ OUR PEOPLE & PROCESS YOUR SYSTEMS YOUR DATA Industry Platforms will provide an opportunity to reduce costs, while improving effectiveness and accuracy 1 OUR PEOPLE & PROCESS OUR SYSTEMS WATSON WITH INDEPENDENT MODELS & LEARNING YOUR DATA 2 OUR PEOPLE & PROCESS OUR SYSTEMS WATSON WITH SHARED MODELS & LEARNING YOUR DATA 3 OUR PEOPLE & PROCESS OUR SYSTEMS WATSON WITH SHARED MODELS & LEARNING SHARED DATA YOUR DATA 4 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

27 Generating Insight

28 Insight use cases using pre developed analytics models CHURN PROPENSITY ANALYSIS Total Customer Churn Holdings Churn COGNITIVE SERVICES Tailored News and Alerts Tone Analyzer Psychographic Personality Insights CASHFLOW ANALYSIS & FINANCIAL EVENT PREDICTION Overdraft Large Deposit 30 PRODUCT / UPSELL PROPENSITY Credit Card Investment Theme Affinity Wealth Services Affinity BEHAVIOR-BASED SEGMENTATION Dynamic Client Segments Using Interactions and Behaviors 2017 International Business Machines Corporation - CONFIDENTIAL LIFE EVENT PREDICTION Baby Marriage Relocation Job Change Retirement

29 Client Insights for Wealth Management provides every FA with a Predictive, Prescriptive, Cognitive Assistant Identifies attrition risk, potential life events and product propensities Indicates reasoning and recommendations Client psychographic profile and insights Prioritized news based on portfolio

30 A Salesforce Wealth Management Offering that leverages Components of IBM s Watson Client Insight for Wealth Management Client Attrition: Ability to predict client attrition 30 days ahead of time to protect revenue and wallet share, while also building profound client loyalty Dynamic Segmentation: Advanced dynamic client segmentation helps identify unique cohorts of clients by behaviors, account profile information, and demographics Life Event Prediction: Predict life events impacting client s financial lives to help advisors proactively service a client s needs Product Propensities and Investment theme Affinity: More effectively run campaigns by identifying client product propensities, investment theme affinities, and life events driving new business opportunities Cognitive Assist: Watson-powered summarized news on portfolio, client interests, sentiment on client communications, client psychographic profile Feedback Mechanism: Machine learning technology trains, learns, and adapts to your clients and their data API-Driven: Consumable via APIs to embed insight components in your existing front office platform

31 Managing Risk and Compliance

32 Opportunities to Improve Regulatory Compliance with Cognitive Regulatory Change Management Know Your Customer Anti-Money Laundering Misconduct Surveillance Address constantly changing regulations and manage control requirements more effectively Streamline customer due diligence and remediation activities Enable more effective identification and investigation of suspicious transactions Identify potential misconduct more effectively

33 Credit Processes Currently Require Significant Manual Processes Examples of manual or semi-manual processes include the following: Process Reviewing Prospectuses for 40 Act (1940 Investment Companies Act) Mutual Funds Collecting monthly Net Asset Values (NAVs) for Hedge funds Checking for compliance with covenants in ISDA or other Master Netting Agreements Checking for compliance with key terms and conditions/covenants in commercial Loan Agreements Regulatory Guidance requires an independent review of third party real estate appraisals Reviewing Focus Reports for Regulated Broker-Dealers Reviewing Call Reports for Regulated Depository institutions Type of Data Unstructured Unstructured Unstructured Unstructured Unstructured Structured Structured Description Copyright Promontory Financial Group, an IBM Company. All rights reserved. For example, Fidelity will allocate trades to the 100+ mutual funds. Each fund prospectus must be read to determine key data, Assets under Management, Permitted Investments, Investment strategy. Monthly NAV data from hedge funds is delivered in multiple forms, s, PDFs, web sites, etc. and is typically aggregated each month by strategy and force ranked by performance. Maintenance covenants are included to the Schedule to the ISDA (i.e. minimum, NAV, permitted % decline in performance). These need to be compared to the NAVs collected above. Similar to above. Credit analysts extract key terms and covenants from loan agreement to include in the Credit Application and for on-going monitoring. Appraisals are typically received in PDF or similar. Extracting data is a cut & paste effort. Also, capturing market data across appraisals would be a useful database. Focus reports are highly structured reports and are not publically available. Credit analysis extract (copy & paste) data from Focus reports into Credit Memos. Call Reports are very structured. Other vendors (SNL) provide extracts of Call Report data to subscribers. 35

34 Surveillance Insight for Financial Services Holistic and cognitive insights to detect, profile and prioritize complex financial crime scenarios

35 H o l i s t i c S u r v e i l l a n c e Integrates insights from transaction, electronic communication, social media & voice data detects anomaly sequences from multiple sources scales to billions of events with near real-time alerts

36 Holisti c Survei l l ance Cognitive Reasoning Intuitive Vi sual ization effective visual analytics monitoring and replay capabilities

37 H o l i s t i c S u r v e i l l a n c e C o g n i t i v e R e a s o n i n g reasons with continuously updated data models remembers long-term observations over time analyzes sentiments, semantics, & behaviors

38 Surveillance Insights for Financial Services Fuse insights to detect suspicious activities View linkages with instant drill-down & playbacks Build employee profiles with personality & behavior traits See alerts & investigations from continuously updated risk models Transactions Communications External Order Trade Execution Reference Chat Voice News Social Surveillance Reduced cost of employee non-compliance & misconduct Faster detection of sophisticated scenarios Risk based prioritization of alerts and reduced false positives Trader Profiling to not only protect against risk but to identify best practice and opportunities for growth

39 Watson for Legal in FSS Outside Counsel Insights Performance Dashboard Outlier and segment analysis Invoice drilldown and anomaly detection 41

40