AI Primer

A business perspective on AI
 AI – what is the definition?

Definition of ARTIFICIAL
INTELLIGENCE Supervised Genetic
Programming
1.1: a branch of computer
science dealing with the Machine
Deep Learning
simulation of intelligent Learning

behavior in computers
2.2: the capability of a Data Mining

machine to imitate intelligent

human behavior Artificial
intelligence Unsupervised
Mirriam Webster

NLP Robotics

Turing Test Artificial

Neural
A test for intelligence in a computer, networks
requiring that a human being should be Voice
unable to distinguish the machine from recognition

another human being by using the replies to Expert

questions put to both. systems
 AI is coming of age and there will be a revolution…
DATA, CLOUD, Robotic Process
TRADITIONAL DIGITAL CHANNELS Automation (RPA) AI AUTOMATED DECISIONS
1920 - 2005 2005 2015 2017

CUSTOMERS CUSTOMERS CUSTOMERS CUSTOMERS

SELF SELF SELF

SERVICE SERVICE SERVICE

INSIGHT INSIGHT INSIGHT INSIGHT

RPA
PRODUCT PRODUCT PRODUCT PRODUCT
COMPLIANCE COMPLIANCE COMPLIANCE COMPLIANCE

RISK $$ RISK $$ RISK RISK

HARDWARE HARDWARE
$ $
3rd PartyData HARDWARE
3rd PartyData HARDWARE

Traditionally, organisations were
very people intensive, limiting the
products possible and customers
that could be acquired.
The advent of the Internet drove Availability of more 3rd party data, . Global competition, Internet giants and
adoption of digital channels, compute capacity and SaaS in the governments driving open standards for
reducing customer servicing cloud further optimises a range of competition means organisations have to
headcount and providing more back office functions. This is drastically cut costs to compete. The use of data
data for customer insight. Scope enhanced through quick win and context driven AI automated decisioning will
for more products and customer tactical RPA deployments. be the new “white collar worker revolution”.
acquisition growth. Allowing better customer insight, more
products/customers and better compliance.
 Example supervised approaches
Regression
• Classic “old school out of uni”
techniques were commonly used for:
• Credit Risk
• Claims Fraud
• Traditionally trained offline and
deployed as a fast scorecard
• Recent extensions are continuous re-
fitting / training
Others: Genetic programming, Support vector machine, random forests, ensemble approaches, etc.
Decision trees
• Uses “buckets” to categorise
observations by a range of their
variables. Useful for predicting
behaviours and detecting fraud
Artificial Neural Networks
• Simulates “the brain” through a series
on neural nets
• It is trained on data sets and outcomes
and will “learn”
• Multiple features and patterns within
the data can be recognised and it will
be able to classify new events as they
occur
• E.g. credit card authorisations
 Example unsupervised approaches
Rules / expert systems
• Rules are created by “talking to
experts” or exploring the data
• Still powerful as it captures and
applies the knowledge of experts and
does not large volumes of known
outcomes
• Used extensively, but is easy to second
guess – hence the challenges in AML
and finCrime applications
Others: Outlier analysis, PCA & dimensional reductions, etc.
Clustering / peer groups
• Uses the data itself and a set of
variables to cluster or segment the
data
• Great for spotting needles in haystacks
where there are few known outcomes
• Uses in internal fraud, surveillance and
recommendation engines which are
not fully personalised
Time series analysis
• Analyse data over a series in times –
usual “back on itself”
• Can spot new trends and changes in
behaviour
• Identify a build up to an event:
purchase imminent, cyber attack or
rogue trade
So what is machine learning and deep learning?
Machine learning
• Classically supervised techniques: Key
is that it does not require the
algorithms to be manually developed
by specialist programmers
• Looks for patterns: ideally suited to
identify patters and using them for
predictions
• Not limited to supervised: can also
leverage unsupervised techniques
• Not just artificial neural networks:
other supervised techniques are used
Deep learning
• Heavy reliance on neural networks:
These tend to be at the heart of the
solution
• Used in supervised and unsupervised
modes: the latter helps to discover
patterns or features
Evolution or • Has many layers: Claim to understand
“rebranding” concepts or features
• Large data applications: typically
requires a lot of data
• Has been criticised as being too
“black box”: some applications this is
an issue and will it become
unpredictable?
 And what about Robotic Process Automation (RPA)?

Screen scraping Robot Process Automation (RPA)

• Taking effort out of • New technologies make it easier to
collecting data from scrape screens
multiple systems without • But also allow automated form filling FUTURE:
impacting them and button pressing Straight
• Fairly primitive • No impact on the underlying systems
Add direct through
• Did not typically interact • Quick short term fix to reduce processing and
back with the underlying automation
headcount needs for repetitive simple AI driven
system work
automated
• System is trained by humans as oppose
to programmers (AI may be used to
decisions
help it learn what buttons to press)
• Can be supplemented by rules
• Never gets tired, works 24/7, hugely
consistent
 Why is AI hard to get right?
Challenge
Huge volumes, poor
quality and missing
data
Not coherently
connected – poor
customer single views
real business value
Dumped into open
source technology
“data lakes”
Opportunity
Automate high quality
single customer views
across the enterprise
Artificial Organisations can
Intelligence (AI) is Dynamically represent data
as networks at scale to
better optimise AI-
failing to deliver provide context driven decisions to
unlock the value in
in AML Leverage and coexist with their data
open source “data lakes” as
a single platform

“We have 3,500 people investigating
Does not reflect real
AML alerts – our systems are creating
life situations
too many false positives and missing
the real risk – we fear a multi-billion
dollar fine”
Provide effective AI business
solutions to service multiple
use cases
“We have reduced our headcount by
30%, identified more risk and can
better react to a changing regulatory
environment”

“Deep learning alone cannot solve these problems, you need to combine Human Intelligence with Artificial Intelligence”
 AI’s not working – diagnostic view
Data challenges
• Too few data sources: more data can
help overcome data quality issues,
especially third party sources
• Not enough training data: this is a
classic issue – especially when there
are many different types of outcome.
Often the failing of machine learning
and deep learning
• Data does not represent real life:
missing single views or networks of
relationships
• Data quality: algorithms and
approaches are challenged by poor
data quality
User adoption
• Unhelpful black box output: “78% risk
of criminality” – where does the
investigator start?
• “Wrong more often than right”:
disenfranchises the end user – false
positives are an adoption killer
• Too complicated: you can lose users if
it does not feel familiar enough
• Manually intensive: system does not
take the drudge work out of the
decision step
Model algorithms
• Worse than random: Normally an
issue in environments where the
targets have reverse engineered rules
in a rule only system
• Too many false positives: annoys
customers, creates large workloads,
kills effectiveness
• Missing critical events: will often fail
to spot what you are looking for –
coverage issue
 A successful approach to selecting AI projects
Philosophy
Have a vision, start piloting early, move
toward the end state in “baby steps”, work
in parallel and deliver results early…

Maturity
Data
available
Paper Pilot Communicate
Significant business case validated
labour costs checkpoint business case

Significant
potential Pilot Operate Measure Optimize
impact

Ease of AI adoption
automation
programme
Proven
examples Time
Vinay Kumar M Y
vkmy18@gmail.com
8095353809