Data-quants and biologically inspired intelligence

How artificial intelligence is transforming financial services

Evolution has carefully preserved two distinct hemispheres in our brain – the right side pays wide open attention to the world, seeing the whole, whereas the left is adept at focusing on a single detail. The right hemisphere sees things in context and connected, recognizing the implicit meaning in vast amounts of information. In contrast, the left hemisphere isolates what it sees, focusing on what is unambiguous and logical.

Advances in computer technology and communications have given us machines with tremendous “left brain” capability, but even the most powerful systems struggle with the simplest right brain tasks. To solve the big problems facing our scientists, governments and financial institutions, a new line of machine intelligence is needed.

ai-one inc., based in San Diego and Zurich, has developed an adaptive holosemantic data space with semiotic capabilities (“biologically inspired intelligence”) that allows users to quickly analyze and discover meaningful patterns of interleaved text, time related data, and images. With the ai-one™ SDK, developers create intelligent applications that deliver better sense-making capabilities for semantic discovery, knowledge collaboration, sentiment analysis, image recognition, data mining and more. It also provides complex AI with reasoning and learning capabilities that get smarter with each use.

As has happened in the past, the breakthough comes not from the giant technology companies but from some brilliant, independent minds at a small company in Switzerland.

What is it and why does it matter?
The amount and types of information generated today are enormous and the access we enjoy due to the Internet are unprecedented. From an EMC/IDC report on the Digital Universe: “At nearly 500 billion gigabytes the Digital Universe, if converted to pages of text and assembled into books, would stretch to Pluto and back 10 times. At the current growth rate, that stack of books is growing 20 times faster than the fastest rocket ever made.

The Digital Universe is also messy… more than 95 percent of the data in the Digital Universe is unstructured, meaning its intrinsic meaning cannot be easily divined by simple computer programs…..”

This is creating an “information overload”. While for some the issue might be a nuisance, in the realm of research, knowledge management and global finance, “information overload” is a major and compounding problem for the experts and professionals we depend on to keep our physical and financial lives healthy and safe.

According to ai-one’s CEO Walt Diggelmann, conventional computing, i.e. “left brain” capability, cannot be forced to deliver “right brain” functions like pattern recognition and “sense making”. The behaviour of financial markets, terrorist organisations, and biological systems cannot be reduced to the elegant mathematical models of the physical world. ai-one’s new line of evolution can help “connect the dots”, whether we are trying to find a terrorist, build safer financial markets or understand the human genome.”

Understanding ai-one technology
One of the big visions of mankind is to build an equivalent to the human brain. At ai-one inc. the goal is to emulate the ability of the brain to think and to recreate that same ability in a computing system. By understanding the functions of the elements and pathways in the neocortex, technology could have the capability to process information and solve problems like the human brain.

Computers are generally based on the theories of Konrad Zuse and John von Neumann. These are formal data handling concepts. In order to build a biologically inspired machine with the same abilities as our brain, ai-one needed to replicate the biological structure and processes.

Cracking the neural code
The first key was to discover the genetic algorithm. This algorithm not only describes why and how the neurons fire, but also successfully interprets the actual meaning of the stimuli. The discovery of this algorithm and the creation of a data space within which the information could be stored lead to the development and introduction of ai-one, the name used to describe it’s technology.

ai-one consists of several genetic algorithms which enable the generic detection of recurrent patterns in all types of data, including but not limited to binary data, text, and specified formats. These patterns can be recursively nested in the input data and still found by the algorithms.  The recognition of these basic patterns is not based on a linear algorithm that tries to detect significant changes in the input data stream, instead the detection of these patterns is an inherent characteristic of the way the data is stored in ai-one.

ai-one uses a new kind of neural network, called a holosemantic data space (HSDS) where the incoming data is transferred into its generic representation as neural cells and synapses. By introducing the data into the HSDS, the inherent patterns are recognised by the interconnection of the resulting neural cells. The smallest amount of data processed by ai-one is called a data-quant. Depending on the application, a data-quant can be a binary digit, a pixel, a character in text, an atomic data value of a particular protocol/file format, etc.

The HSDS does not contain weights or thresholds within its neural cells, therefore the semantic context of the input data is established only by the interconnection over synapses of the cell cores. After data is introduced into the HSDS, the system produces no human viewable structure of the data, as it self-organizes the resulting cells and synapses. The communication with the HSDS is done by the stimulation of the neural cells (with a question or command), which then produces a human viewable structure that can be used for further processing of the data or used by an application.

ai-one employs a combination of formal and neural computing. This environment has specific features such as recognizing concepts, discovering intrinsic information structures and concept patterns with the concept of language, understanding Boolean logic.

As in the brain, time is an inherent dimension in the data, providing the connection to pragmatics. When something was learned by the system is a factor in understanding the semantic. As the meanings of concepts and structures evolve, ai-one learns from the new content but can also discern and track those changes over time.

Teaching, not programming
“ai-one, like a child, has to be fed information and taught what to do, not programmed”, says Manfred Hoffleisch, its inventor and Head of R&D. For ai-one to converse with a user, it has to learn basic knowledge and goals. In order to understand the semantic meaning and semantic association of words, where something is said and by whom is considered. The location where something is written defines the meaning and importance of the content. Once a given set of information has been loaded, ai-one learns from fulfilling specific tasks through interaction with experts and applications. The resulting knowledge base can be extracted and transferred to the next ai-one instance or a new generation of products.

Comparison with known ai approaches
Since there are no weights or thresholds for the calibration of the HSDS, it differs fundamentally from today’s known neural approaches. The main advantage is that the system doesn’t suffer under so called over-learning or under-learning conditions.

The quality of the result is no longer limited by the intelligence of the developers and the rules they create, but by the data itself. Prof. Ulrich Reimer, University of St. Gallen says “the HSDS uses a different paradigm based on context resulting in directed associations that provide better metrics, faster performance, and incremental learning from a smaller set of inputs”.
 
Product and value proposition
ai-one inc.’s (ai = autonomic intelligence) is used as an application programming interface (API) for the development of “best in class” products. It is incorporated into three API libraries, Ultra-Match™, Graphalizer™ and Topic-Mapper™. Ultra-Match is specialized for the field of imaging, Graphalizer for time related value chains and Topic-Mapper is specialized in the area of data and language (semantics). 

The libraries are delivered as a Software Development Kit (“SDK”) with training and custom development. Once an application embedded with ai-one is marketed, the Company receives licensing fees for the life of the product. Adoption of a powerful new technology must have a strong value proposition for the developer.
- Short learning curve & fast application development
- Binary data handling for speed (proprietary chip version for more speed)
- Architectural design flexibility using small (500KB) core program

Success with early adopters
After some dramatic results using ai-one on a laptop in a NIST competition, the Company was approached by the BKA (German counterpart to the FBI) to develop an application for crime scene shoe print matching and analysis. The outcome of this project was the commercial product, ASTIS™, which began selling in the EU and US forensic lab markets in 2010.

In a project with Swissport, ai-one was used to solve the problem of name verification and matching between airline passenger manifests and the no-fly list from the Department of Homeland Security. This application is being used by airports in Zurich, Frankfurt, and New York’s JFK.

Aggressive and innovative companies have worked with ai-one on a variety of new projects. Brainup, a semantic search tool for enterprise search engines, is hitting the market now. The CENDOO “butler” will launch later this year. A tool for searching, analysing, modeling and trading on financial patterns correlated with events monitored with text analytics is under development. Additionally, ai-one has partnered with universities on studies to assess the performance of ai-one technology.

The road ahead
The latest developments in the industry referred to as the “Semantic Wave” or Web 3.0, are a clear validation of this new direction. Microsoft’s Bing search engine, Googles acquisition of Metaweb, and Apple’s acquisition of SIRI at huge multiples underscore the value of effective semantic technology. With ai-one’s revolutionary technology, the best may be yet to come.

For more information contact Tom Marsh. Email: tm@ai-one.com; www.ai-one.com

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The May – June 2013 Issue

Highest corporate tax
rates in Europe

European countries are scrambling to raise every last penny of funds through taxes. But some countries may have gone too far...

Belgium

Though all business taxes in Belgium can be paid online with little effort and preparation, the rates are still sky-high at 57.7 percent, including a staggering 50.8 percent total rate on profits only in social security contributions.

Belarus

In Belarus, a company spends up to 338 hours annually preparing for and paying ten different taxes and duties. The total tax rate has incredibly been lowered to 60.7 percent, from 117.5 percent in 2008.

France

A company in France pays seven different taxes and duties, the sum of which can amount to 65.7 percent of profits; though President François Hollande has announced a wave of business tax rate cuts coming up.

Estonia

A business in Estonia pays 67.3 percent of profits in tax, 37.2 percent exclusively in social security contributions. The country has gone against the grain in Europe by raising businesses taxes from 48.6 percent in 2008 to the current rates.

Italy

While corporate income tax (IRES) in Italy is limited to 38 percent of taxable profit, a company operating in Italy can expect to pay 14 other taxes and duties, including social security contributions, bringing their total payable tax to 68.7 percent of profits, according to the World Bank.

Norway

Norway taxes motor fuels twice, with a road use tax and a CO2 emissions tax. Combined with strikes in the energy sector that have curbed output, the price of gas at a local pump has soared to $10.12 per gallon.

Turkey

Though Turkey sits on the Suez Canal and neighbours many oil rich countries, the price of a gallon of average gas clocks in at $9.41 in Turkish pumps, because of a 60 percent share of taxes. 

Israel

Like Turkey, Israel is surrounded by oil-rich neighbours, but drills very little itself. Gas prices are controlled by the government, so about half of the $9.28 per gallon goes to taxes.

Hong Kong

There are few gas stations in Hong Kong, but the ones available charge up to 76 percent more per gallon than mainland China, where the government caps the cost of fuel. A gallon at the pumps will cost around $8.61 on the island.

Netherlands

Expensive labour costs make the Dutch petrol prices the dearest in Europe, at $8.26 per gallon; though the 57 percent tax add-ons don’t help.

The credit crisis

8 February 2007
HSBC warns of subprime mortgage losses

2 April 2007
New Century goes bus

14 September 2007
Wholesale markets have dried up

17 March 2008
Rescue of Bear Stearns

7 September 2008
Rescue of Fannie Mae

15 September 2008
Lehman Brothers file for bankruptcy

3 October 2008
US congress approves $700bn bailout

14 February 2009
$787bn stimulus approved by congress

 

The effects of the current financial crisis are global and irrefutable. With the collapse of Lehman Brothers, the domino effect of irresponsible public monetary policies, huge levels of unsustainable debt, and a deregulated financial sector, has escalated to the point where no corner of the globe has been left untouched.

1973 oil crisis

October 1973
Syria and Egypt launch an attack on Israel on Yom Kippur and set off a twenty day war;

1977
US President Carter creates Department of Energy, which develops the US strategic petroleum reserve

 

The Organisation of Petroleum Exporting Countries (OPEC) used their oil reserves as a weapon with the Arab Oil Embargo against those who supported Israel. By January 1974, world oil prices were four times higher than they were at the start of the crisis, especially in the US, and the shock led to a huge drop in the stock market with NYSE losing $97bn in just six weeks.  The embargo lasted five months, and the effects are still seen today.

German hyperinflation

1922-1923

Hyperinflation
1923 – 1924
Stabilisation

 

The trouble began when Germany missed a repatriation payment, worth about one third of the German deficit in this period. Inflation was already high but by 1923 it was raging. Prices doubled within hours, and by late 1923, it cost 200bn marks to buy a single loaf of bread. People burned money as it was cheaper than buying firewood. Germany eventually regained control of its economy when it introduced the Rentenmark into circulation in 1923, and then the Reichmark in 1924.

The Great Depression

1929-1933
The Great Crash
1934-1939
Recovery and Recession

 

After the decadence of the Roaring Twenties, the 1930s saw the biggest economic slump of all time. The stock market crashed on 29 October 1929, and optimism and decadent living tumbled along with the figures. The GDP fell from $103.6bn in 1929, to $66bn in 1934 and the subsequent years of recovery were the most dramatic in US history.

1907 bankers’ panic

1907
Otto Heinze and his brother Augustus Heinze bought shares of United Copper.

 

The stock market was already cautious over the tight money supply, but the US was thrown into a depression after the stock market fell nearly 50 percent from its peak in 1906. The Heinze brothers thought they could influence market shares but ended up bankrupting lenders that provided the financing to buy the stock. A chain reaction left nine institutions bankrupt. By February 1908, the panic was over and the government created the Federal Reserve system, to prevent banks from exercising too much control over the economy.