How artificial intelligence is helping to improve retirement outcomes
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Artificial intelligence, or ‘AI’ for short—it’s in the media, it’s in books, and it’s in the movies. It’s praised and shunned in equal measure. But despite the hype, there’s often not much clarity about what AI is and what it does. So what is artificial intelligence and how does it help people and organisations like VicSuper?
Artificial intelligence is when computer programs or machines perform tasks which demonstrate human behaviours such as reasoning. AI automates repetitive learning and discovery, adds intelligence to existing products, finds structure and regularities in information, and allows for more data and deeper analysis. These benefits, and their potential, are profound.
The idea of getting computers to problem-solve by mimicking basic human reasoning has been around since the 1950s. In 1952, computer science founder Alan Turing embedded mathematical equations in a computer program. Today, these mathematical instructions are called algorithms.
While algorithms aren’t new, what is more recent is the depth of data and computing power to not only perform a task, but to learn how to do it better next time through machine learning or deep learning:
- Machine learning uses algorithms to perform a function with the data assigned to it, then gets better at performing that function. A good example is Spotify’s music recommendations based on a person’s listening history. Or virtual personal assistants like Google Assistant or Facebook Messenger, which provide information and perform tasks by recognising an individual’s unique speech patterns.
- Deep learning is a subset of machine learning but goes much further. Its algorithms can determine on their own if a prediction is accurate or not. Deep learning programs use an ‘artificial neural network’ inspired by the human brain to draw its own conclusions, learning from mistakes to get a better result each time. Google’s AlphaGo, for example, has used deep learning to make moves in the intuitive board game, Go, to beat professional players.
These days, computer algorithms are used worldwide, every day. They’re embedded in programs like your Facebook feed, your Netflix program recommendations, even the ads you’ll see in your Gmail. Modern smart phones, millions of times more powerful than the computer controlling the NASA Apollo 11 mission, are programmed to understand speech and recognise a face. More sophisticated computer systems like IBM’s Watson uses deep learning algorithms to help make utilisation management decisions in lung cancer treatment in New York, and to deploy data and figure out how weapons systems, sensor systems and targeting systems work for the Australian Department of Defence.
In Australia’s superannuation system, AI is overwhelmingly used to enhance member experiences, as well as make a fund’s operations more efficient. In the next section we look at how VicSuper uses AI.
VicSuper and AI—enhancing and protecting the member experience
AI can help provide a better experience for members in a more efficient, more insightful and more cost-effective way. At VicSuper, we see AI as a tool only—there’s no substitute for a member’s personal, human interaction with our in-house team.
So how do we use AI, and how can our members benefit from it?
Robo-advice and chat bots
Robo-advice uses AI algorithms to manage and optimise client assets. A few years ago, robo-advised assets were valued in their billions; by the end of 2020, robo-advised assets will be in their trillions.
Robo advice is gaining increased acceptance in super. At VicSuper, we use AI algorithms to help members get advice and information that’s tailored to their financial situation and life stage. Our award-winning1 service Beeline uses robo-advice to provide members with easy access to financial advice outside business hours. Our members find Beeline useful because they know it’s backed by a face-to-face service that allows them the opportunity to talk to us when needed. It’s a good example of how we use AI as a tool to enhance members’ retirement outcomes and the services we provide.
Chat bots are computer programs which use AI to have a ‘conversation’ with the user. They’re normally used for things like customer service or information requests, in applications like messaging, telephone, website or mobile apps. Amazon Alexa is an example of a chat bot. While chat bots have been around for 20 years, it’s only in recent years that the technology has become powerful and sophisticated enough to make them useful to people and businesses.
AI and investment
AI is used to facilitate the investments we make on behalf of members. AI technology is often better than human brains at analysing correlations and patterns using algorithms, data mining (examining large databases to generate new information), and language processing. Used this way, AI can help make more informed investment decisions—for example, by forecasting investment fundamentals like revenue growth, market size, industry competitors, and then analysing the data to determine which metrics are most likely to drive successful investment outcomes. AI is particularly useful in investment portfolios that use complex mathematical models (quantitative systems) to detect investment opportunities.
AI, risk and security
AI and robotics do carry some risk—such as the risk of falling behind on insights yielded and efficiencies obtained, employment risk resulting from automation, and the risk that AI and digital solutions will reach saturation point. Only those tools that can get the job done will survive. Chat bots might be one tool, but others will surely emerge in this fast-evolving space.
At VicSuper, we use AI to help detect and prioritise anomalous activity on the network and systems that might otherwise go unnoticed. Such activity can be escalated to analysts monitoring the systems 24/7 from Australia for further investigations before these threats result in incidents
AI: Game-changer, future-proofer, or both?
AI can help provide answers to some of the most challenging and fundamental problems in the world today, like climate change and poverty. Seen this way, it is both game-changer and future-proofer. Using deep learning, for example, a computer may one day be able to read billions of pages of information, understand them, synthesize that information and glean insights that can provide a solution to such critical problems.
On a more everyday level, AI is enhancing efficiency and productivity. As a profit to member fund, our members are at the core of everything we do. Our approach and commitment is to use algorithms and robo-advice as tools to provide great member experiences and help them achieve a better retirement outcome.
Ultimately, we believe that human beings, individually and collectively, are hopeful and positive. Despite the challenges, risks and threats, it’s much more likely that AI will be used to make people’s lives more efficient, more creative, and more resourceful.
Australia has more than $2.5 trillion in Australian superannuation savings. VicSuper is all about giving members a better experience and uses AI as a tool to do this. Learn more about the value, services and products that VicSuper provides at Australia has more than $2.5 trillion in Australian superannuation savings. VicSuper is all about giving members a better experience and uses AI as a tool to do this. Learn more about the value, services and products that VicSuper provides at vicsuper.com.au/about-us
This advice has been prepared without taking into account your objectives, financial situation or needs. You should therefore consider the appropriateness of the advice in light of your individual circumstances before acting on the advice. You should also obtain and consider a copy of the relevant Product Disclosure Statement available at www.vicsuper.com.au before making any decisions.
Refer to the VicSuper awards page at vicsuper.com.au/about-us/who-we-are/recognitions-and-awards
VicSuper Pty Ltd ABN 69 087 619 412, AFSL 237333, Trustee of Victorian Superannuation Fund ABN 85 977 964 496.