Eric Jensen, Co-founder and CTO of Causality Link, outlines the key ways AI and NLP technology will shape the financial industry in the years to come.
Artificial Intelligence (AI) and Natural Language Processing (NLP) have become business buzzwords across industries, but in 2021 we will get a sense of who is really applying these technologies to tell us new things about our world.
The technology and business landscape in 2021 will of course largely be determined by how companies continue to respond to the COVID-19 pandemic. We closed a Series A investment round in 2020, and with this funding, we completed the first iteration of our newest analytical engine, which enabled us to publish public, up-to-the-hour metrics that summarized how the entire world was viewing the impact of COVID-19 on segments, sectors and countries. This is just one example of how the crisis will be a proving ground for new technologies and will color business strategies moving forward.
At the same time, with the advent of vaccinations and retreat of the pandemic, investors’ attention will eventually and inevitably shift back to national and world trade and debt themes. Some industries won’t be able to move on: oil, airlines and hotels, for example, have had serious blows and may never recover to pre-COVID norms, which also means a network effect for all of their subcontractors.
We believe the consumer banking industry will be hit hard by vigorous attacks from the fintech sector.
With all banking transactions moving online and significant growth and innovation in 2020 due to COVID, fintech companies will continue to encroach on the traditional consumer banking industry. The January 2021 “short squeeze” by retail investors against hedge funds on GameStop, AMC Theatres and other stocks is a manifestation of this dynamic from another direction. At Causality Link, we’re watching all of these trends closely as our customers are trying to predict the future of markets. We’re bringing AI and NLP to bear in brand new ways that will empower investors, companies and governments as never before.
Finally, for 2021 we are watching the continued and growing interest in ESG, and innovation in the space. For us this means further adoption of our custom ESG indexes by our customers. Unlike the static ESG indexes widely used by investors today, our Research Assistant platform is the first to employ NLP to create real-time custom-built ESG indexes. These indexes enable firms to focus on the elements most important to them as they seek to estimate the impact of ESG factors. The technology identifies the favorability factor of various concepts through the interpretation of statements made across millions of documents, revealing the collective point of view on these ESG factors, and their causal interactions with fundamental business factors. We expect investors and consumers across industries to be demanding similar smart, customized solutions in 2021.
Likewise, these investors and consumers will continue to demand increased transparency around each of the E, S and G categories. Most of the factors contributing to ESG scores are difficult or impossible to report as a numerical value that is as reliable as typical financial metrics. Also, the perception around them can evolve and have a material impact outside the boundaries of any annual, quarterly or even monthly reporting. It will become de rigueur in 2021, and beyond, that every CFO have a proactive plan to control the narrative and be prepared for positive or negative publicity around ESG factors.
To read the full article, click here.