AI is no longer a concept that lives outside of finance. It is already changing how analysis gets done, how decisions get made, and what employers expect from the professionals making them. Before you can use it effectively, it helps to understand what it actually is.

The Four Types of AI

Reactive machines perceive present information and plan actions accordingly. Limited memory machines harness recent observations to make informed decisions. Theory of mind machines can form thoughts in reference to emotional context. Self-awareness machines demonstrate intelligent behavior through ideation and understanding of their own internal states.

How Machines Learn

Supervised learning is the most common method, a machine derives a function from labeled input and output pairs and adjusts when it produces incorrect answers. Unsupervised learning involves transforming raw data into useful information through clustering and association. In reinforcement learning, a machine is conditioned through occasional rewards and punishment to act rationally and independently.

What it Means for the Future

Rapid advances in AI will result in a profound impact on productivity, employment, and competition. Businesses that harness AI can improve their value proposition to customers while improving profitability at the same time.

The largest criticism of AI is that it will automate low-skill jobs, but rapid expansion in the field will also result in more high-paying jobs requiring more highly-educated employees. Companies attempting to achieve a competitive advantage can leverage AI to optimize their business, and once the economic benefit of AI integration outweighs the cost, broader adoption across industries will accelerate.

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