AI has delivered convenience, but is it a game-changer?

Many meaningless buzzwords these days. Here are a few: game-changer, corporate values, thought leader, best practice, ESG, low-hanging fruit, new normal, leverage and the most overrated of all; thinking outside the box.

Today, we’ll add another: Artificial intelligence (AI), or is it not? Sounds cool saying it but is AI the “game-changer” or is it just another useless marketing hyperbole? Is it the “new normal” or is it just basic automation masquerading as the real deal?

The abuse of this word happens in almost all industries and the finance world is no different. Let’s find out.

First, some differentiations. Two words — AI and machine learning (ML) — tend to be used interchangeably but mean different things.

ML is based around the idea that by giving machines access to analyse data we can allow them to learn for themselves. AI refers to a set of algorithms performing specific tasks or step-by-step instructions.

Looking deeper at key finance applications billed as AI-supported turns out they are really a set of algorithms performing specific tasks.

In other words, an element of human programming is involved and, therefore, can never be truly AI. Some literature even claims today’s AI is just a bunch of conditional statements and advanced programming tricks.

Examples: Although sold as making “personalised recommendations”, robo-advisers have nothing to do with AI. They are just automated features.

Typically, they are activated immediately after sign-up usually via questionnaires designed to help the software running the robo-adviser understand your current finances, financial goals and risk tolerance.

In brief, no ML is involved. No computer digests the client data shared and develops new conclusions never originally programmed by humans.

All that to say, the AI- supported robo-adviser label is just that: a marketing label. A similar view applies to chatbots (virtual assistants) on broker online/mobile platforms.

But putting aside the marketing hyperbole, these 'AI capabilities' have had a positive impact on the industry.

If these solutions are helping financial intermediaries address basic client inquiries, minimise downtime and lowering business support costs, that’s a step forward.

Whether you believe the term is creating false expectations or not, so long as these capabilities are improving efficiency, answering FAQs and reducing costs, then maybe it matters little.

Yes, call it what you want, when the good overrides the bad, maybe I should not fault people gushing about it.

Besides, the lines are too blurred. Admittedly, for a long time, I couldn't tell the difference between AI and ML.

Just the other day, I was surprised to learn that in fact there’s very little machine learning involved in self-driving. But who cares?

Nonetheless, the arbitrary use of the term AI has become a problem. Understandably, companies need ways to woo clients to the yard, but they shouldn’t push that far.

Until when the real AI arrives, the only AI in my book is Allen Iverson or if you’re a Green Day fan, you’d go for American Idiot.

Mwanyasi is the MD Canaan Capital.