Cashing in on the AI hype: could this prove risky?

(Image credit: Image Credit: Alex Knight / Unsplash)

Without a doubt, the hype surrounding artificial intelligence (AI) has made it a leading buzzword amongst businesses and entrepreneurs around the world. And while the term has been around for many decades, it has only been in the last couple of years that we have seen this technology really take hold of society. For example, every time we browse through our Netflix recommendations or ask Siri what the weather will be like tomorrow, we’re witnessing first-hand the advantages of this technology – namely, its ability to make our lives inherently simpler.

The attractiveness of AI is undeniable, but is there also an underlying danger to this growing hype?

According to MMC Ventures’ latest report – ‘The State of AI 2019: Divergence’ – many of Europe’s ‘AI companies’ supposedly driving innovation in this space in fact have very little to do with this technology. In fact, while one in 12 new startups in Europe is classified as being AI-led, the report found that 40 per cent don’t implement the technology as part of their core strategy or proposition.

So why is it that companies are chasing the label of being an AI startup, and more importantly – what impact might it have on the evolution of this industry?

Why are companies chasing AI?

The hype surrounding AI means that more companies are jumping on the bandwagon, ensuring their brand is able to ride the industry’s momentum. There are a variety factors encouraging this type of behaviour, including the prospect for companies to attract private investment. For example, the MMC Ventures report revealed that startups claiming to work in AI attract between 15 to 50 per cent more capital in their funding rounds compared to other companies.

But at the end of the day, whether companies are chasing AI to gain a competitive advantage, entice new clients, or win funding, the reality is that many companies simply don’t have a business case for their AI. Rather than AI embodying the core of their business strategy, the most common applications of this technology appear to resemble mere add-ons or after-thoughts instead of their principle service proposition. 

Applications of AI by so-called ‘AI companies’ include utilising chatbots (26 per cent of businesses surveyed in the report are taking advantage of this solution), while process automation tools like fraud detection are the second most popular application – employed by 21 per cent.

Of course, these AI tools are undoubtedly important, and can bring valuable benefits. However, it is difficult to suggest that they are integral to the functioning of a company. Moreover, these applications are hardly novel; chatbots, for instance, have been used across websites and platforms for many years, and should not be considered the marker of a forward-thinking ‘AI company’.

The difficulty is that these humble tools come under the same AI umbrella term as more advanced solutions like DeepMind’s AlphaGo. It’s easy, therefore, for companies to claim that they are AI-driven and exaggerate their own capabilities when their use of the technology is basic at best. 

What are the dangers of cashing in on the AI hype?

While there is evidently a business case for cashing in on the hype, this also brings with it some serious consequences. Most importantly, the danger of falsely labelling an AI company as such risks devaluing the long-term potential of this technology.

We cannot deny that artificial intelligence largely remains a mystery to many people – how it works, and what its practical applications are at this point in time are questions that few can answer confidently. So as with any new technology, selling promises of its potential can mean that people become disillusioned if these promises ultimately fail to materialise.

As the market matures and the capabilities of this technology advance, it is important for businesses not to mis-sell their products and consequently undermine the tremendous development this field is experiencing.

AI has the potential to transform our lives, but the opportunities it presents risk being overshadowed by inaccurate claims from tech firms. After all, we have only just scratched the surface of this technology, and it still has so much to offer. However, by stating that a tech solution or service is “powered by AI” when it isn’t will leave the user with a negative and unrealistic perception of what AI can actually do.

This can leave people with a false perception of what AI is truly capable of. This, in turn, can overshadow the true progress that is being made elsewhere, whether this is the rise of the self-driving car or the deployment of AI-enabled biometric authentication systems across our smartphones to protect our personal data.

Make no mistake, AI has already made huge changes in the way society operates, but maybe just not in the way that we’ve seen in sci-fi movies. So, while we may be years away from cyborgs and nanobots, there are many practical transformations that might have gone unnoticed. This is particularly true when we consider the different ways AI is being applied by businesses to transform the way they are able to complete tasks related to data processing, which can be time-consuming.

Thanks to AI, we can now safeguard the personal information stored in our smartphones and online banking systems through biometric authentication; in the form of fingerprint and iris scanning capabilities incorporated into many devices.

Moving forward

I am confident the AI market will undoubtedly continue to ripen, and let’s not forget that the UK continues to be at the forefront of this technological revolution – at 500 AI startups, it boasts a third of the European total and twice as many as the next most active country. But we must remember that all companies claiming to use AI have a duty to ensure that they are not misleading consumers and businesses. Doing so will be to the detriment of the wider industry.

After all, I fundamentally believe that in the long-term, startups will achieve little from building a business that takes inappropriately takes advantage of the latest trends. Instead, one would hope that good sense, innovation and real entrepreneurship will win out in the end.

Nikolas Kairinos, CEO and founder, Fountech.ai
Image Credit: Alex Knight / Unsplash