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HOW AI IS TRANSFORMING CORPORATE FINANCE

Dr. Dorian Selz, CEO, Squirro

 

How are you involved with the financial services industry?

The company that I co-founded is Squirro, an augmented intelligence solutions provider that works with many firms in insurance, asset management, investment banking and other areas of FS. Our customers include brands such as Investec, ING and Helvetia and we have offices in the US, Asia and Europe, so we are fully understanding of the challenges faced by FS firms at a global level.

 

What are the main challenges, as you see them?

Since the crisis of 2008, the financial sector has faced a really tough time. It has to manage ever-growing volumes of complex regulatory requirements, it has seen the rise of more agile and nimble financial start-ups, offering a whole array of different products and services, which has meant that traditional corporate FS providers have found their position under threat.

 

It is also an industry that is fast-paced and relationship-driven. To source and win new business those that work in FS must be able to stay on top of industry trends (and how those trends relate to clients), be aware of what their clients’ priorities are and be able to identify potential deals and opportunities before their competitors do. Lead generation has never been more important and it has never been as competitive as it is now.

 

What’s the key to addressing these challenges?

Dorian Selz

When I started Squirro five years ago it was based on a simple insight: Most companies have unbelievable amounts of data with which they do next to nothing. This represents a treasure-trove of opportunity.

 

The reason for this discrepancy between data holdings and getting data to be put to use is the fact that most data sets are unstructured, siloed in various applications and ever changing. Get companies to be doing more with this data and you have a great company in the making.

 

In FS (and indeed other sectors), there is more data available on clients than at any previous time in history, and using the right tools, that data contains rich insight as to what those clients are interested in, how they would like to be approached and what market opportunities are likely to emerge.

 

But many FS firms are not capitalising on the available insight and are unable to truly understand their customers, so they miss opportunities and the bottom line is affected.

 

What do you mean by unstructured data, and what is the potential of this data?

Unstructured is a clumsy term. It denotes the fact that data sets such as call notes, email, news, research, premium external data source, are – from a computational perspective – difficult to make sense of.

Computers can work with structured data sets only. Yet 80% plus of all data is of the unstructured kind. That is where the potential is.

 

How does Squirro leverage AI to provide customer insights?

We use a multitude of AI methods to bring structure to unstructured data. Pattern detection, supervised and unsupervised machine learning help us to transform unstructured data sets into computable data. Out of this data, we infer actionable insights that we deliver to end users in the context of their workplace.

 

Why is insight so important?

Insight is of the highest importance for any business in 2018 and beyond. FS customers expect to be delighted and amazed on a regular basis and any business that does not do so will see their customers finding other providers that do. To become such a customer-obsessed organisation, one that puts the customer experience at the core of everything it does, insight into those customers is essential.

 

I read an article in the Wall Street Journal earlier this year about a rumoured Amazon move into retail banking. Amazon has no track record in FS, but it’s not hard to imagine how it might make a success of such a move. It’s a company that has placed customer experience central to everything it does and applying that to a different sector such as banking doesn’t feel like a huge leap.

 

How can businesses act on the insights that Squirro helps them with?

The data insight generated by augmented intelligence can help FS firms greatly with their lead generation, not only identifying opportunities for clients but recommending the best product or solution for them.

 

Augmented intelligence solutions will look at data on competitors, partners and markets and identify catalysts that provide additional upsell or cross-sell opportunities to existing clients, and fresh approaches to prospective clients. In a competitive FS world, this is of the highest value.

 

What does the future look like for AI in banking?

AI – or artificial intelligence – is a powerful technology but augmented intelligence is where the real opportunity is for transformation in banking. Augmented intelligence builds on artificial intelligence, by enhancing human input and intelligence to create something infinitely more powerful, essentially people and machines working together.

 

This partnership will address deep but specific challenges within banking and provide insight and recommendations with reasons and with learning.

 

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Interviews

DIFFERENTIATION – THE KEY TO THRIVING IN A SATURATED MARKET

Graham Glass, CEO of Cypher Learning

 

What has enabled Cypher to continue to grow in an increasingly saturated market?

Recognising opportunities for growth around the world is actually one of the things that has helped us grow. We realized that there were so many opportunities outside of the U.S or Western Europe and actually, a lot of our revenue comes from outside of these regions. For example, with our education based LMS, NEO, we have schools and institutions in the Philippines, Latin America, Norway, Australia, and more. The way we have created the product allows the flexibility for it to be tailored to each educational institution’s exact needs and because of this process, we can provide different languages, different elements of learning and really help the teachers in each country make the most out of the system.

 

You have recently expanded into four more locations: Australia, Indonesia, Malaysia and Russia. What was the reasoning behind deciding on these locations?

The growing popularity of our learning platforms has made it possible for the company to expand quickly and cover more of the market around the world. The selection of the new sales offices came as a natural move, as we started to get more and more customers in those locations, and we wanted to seize the opportunity to expand even more. We also wanted to provide local support to our customers, which is an important aspect in our strategy. Since we already had an office in The Philippines, opening new locations in Indonesia and Malaysia was essential. In the case of Australia, since we launched the APAC version of our platforms, with servers hosted in Sydney, it was also vital to have a sales office as well.

 

What is different about your products compared to your competitors?

CYPHER LEARNING is currently the only company on the market that provides a learning platform for each e-learning segment: academic, corporate, and entrepreneurs. Our products are built on the same core platform. They share some functionalities and the overall design of the platform, but they’re targeted towards different markets. NEO is an LMS for schools and universities, MATRIX is an LMS for businesses, and INDIE is an LMS for entrepreneurs. For each of our products, we have created special functionalities that address the needs of each market.

Our platforms are very intuitive, easy to use, and visually appealing, which makes the whole experience more engaging and enjoyable for all users. The navigation is simple, and you can customize the platforms to match your brand and fit your needs.

Our platforms are built to ensure a smooth implementation and they’re easily adopted by students, teachers, trainers, and entrepreneurs. We offer support for 40+ languages, mobile apps for all devices, and accessibility features so all users can enjoy the platform.

CYPHER LEARNING products provide complete solutions with powerful features for managing all teaching and learning activities for schools, organizations, and entrepreneurs.

We’re also focused on bringing innovation through our platforms, by creating cutting-edge features that other systems do not support such as automation, adaptive learning, and competency-based learning.

 

How do you see the e-learning market changing and developing in the future?

I’m very excited about the future of the e-learning market. Machine learning and artificial intelligence hold great potential in terms of making learning truly personalized. We’re already on that path, taking steps forward with automation, multi-layered neural networks, feedback algorithms, amongst many other developments. And things will advance on a massive scale, rather quickly. With AI in online education, we’re not talking about 20 years until it will become the norm. Some of these technologies are going to be available and mainstream in the next few years. Keeping up with these changes and making sure the incredible amounts of learner data will be used correctly will be challenging, but I have high hopes of what the future has in store for us.

 

What advice would you offer other individuals and businesses in the e-learning industry?

We’re all in this together so we need to stay true to ourselves. In order to provide the best tools, the best solutions and the most memorable experiences that support people of all ages to learn new things, we need to keep on learning ourselves. That’s the only way to continued growth, both personally and professionally.

 

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Interviews

IPO: WHY GO PUBLIC?

By Sandy Campart

 

The main objective of an IPO – Initial Public Offering – is to raise capital in order to allow a company to grow. However, during a global economic slowdown, investors are increasingly cautious. In times like these, how should you prepare to go to the market?

 

Reasons for an IPO

A company’s motivation for going public is often linked to the idea of “creating one’s own currency” in order to fund internal and external growth, to diversify future sources of finance and strengthen the financial structure of the company. Listing a company on the stock exchange results in tradability and liquidity, allowing previous shareholders to exit, realising a gain on their capital. It also creates a valuation for the company which will be useful for future succession plans. At a strategic level, an IPO can enable the company to clarify its strategy, refocus its activities, increase its visibility and credibility, and ultimately differentiate itself from competitors.

Nonetheless an IPO will significantly change the way a company operates. Corporate governance has to be overhauled, support functions professionalised and financial communication must be made transparent. All studies show that, when information is withheld, the negative impact on the share price is greater than if the bad news had been announced.

 

2019: a mixed bag

In 2019, newly listed companies have seen their share price grow by almost 13% on average. However, the figures vary greatly. Software and IT security companies have performed the best with an average of nearly 40%.

Nevertheless, the stock market performances of SmileDirect (dental aligners), Peloton (exercise bikes and fitness) and even Uber attest to the increased scepticism of investors for unrealistic or exaggerated levels of profitability. Uber’s price has been particularly disappointing since the latest results presented were well below the expectations of the investors. In the second quarter of 2019, the turnover was more than 5% lower than expected and the profit – or rather the deficit – per share was 53% greater than expected. Uber’s growth has been slower than that of rival app Lyft, and the restructuring costs associated with many departures, lay-offs and resignations do not seem to be controlled. Additionally, Uber’s CEO, Dara Khosrowski, told his employees that the teams were too large to be compatible with the pace of growth needed, while Uber’s CTO, Thuan Pham, believes it could take decades for Uber to achieve its “vision”, suggesting there could be a later than expected ability to turn a profit.

 

Towards a better year in 2020?

For a company wishing wanting to maximise its initial flotation price, there are two strategies to pursue: the first is to float when the company is performing exceptionally, the second is to wait until the stock market is in a more favourable position.

In the context of a global economic slowdown, investors have for several months been moving towards “safe haven” shares in order to protect their assets. This, combined with the chaotic path of some recently introduced companies and the abundance of private financing, makes it difficult to see an acceleration of operations in 2020.

Even though the flotation of Airbnb remains topical, Postmates (delivery service) and Endeavor (talent agency) have paused their entry to the stock market. It is possible they are prioritizing interest from venture capitalists and risk capitalists. Palantir (Big Data) and Stripe (internet payments) could also look for private funds instead.

 

The WeWork failure

WeWork is the most prominent example of our current inability to distinguish a unicorn from a chimera. Investors have to learn – or re-learn – how to resist those appealing equity fairy stories and to see beyond the innovative nature and rapid growth of a concept. Cash flow, debt level and governance remain key decision-making factors. In the WeWork prospectus, the word “technology” appears more than 120 times. The Coué method of repetition is here being used to suggest that traditional valuation models should not apply to this business. There is little doubt, however that WeWork is more of a property developer with an innovative business model than it is a technology company.

 

About Sandy Campart 

Sandy Campart is a lecturer and researcher. He is a member of the Centre of Research for Economics and Management (CREM), part of the French National Centre for Scientific Research (CNRS). M. Campart is director of IUP Banque Finance Assurance de Caen – a finance school in Normandy – and author of “If we dared to invest in the stock market”.

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