We’ve become accustomed to tech giants shelling out millions and millions of dollars to snatch up promising AI startups. But yesterday — when the largest such acquisition ever was announced — the buyers were not from Silicon Valley. They were from Wall Street.
S&P Global has signed an agreement to acquire Kensho, a Cambridge, MA-based AI company that uses data analytics and machine learning algorithms to find correlations and arbitrage opportunities in large-scale financial datasets. The company’s holy grail is to make “complex financial analysis as easy as a search on Google.”
The Wall Street traded financial services corporation paid a staggering US$550 million for Kensho, making this the largest AI acquisition ever, topping Google’s purchase of DeepMind, the London startup that produced the epoch-making Go computer AlphaGo.
S&P Global values Kensho’s forte in frontier AI technology and its close relationships with premium financial clients such as Citibank, Bank of America, Goldman Sachs and JP Morgan. Kensho also works with the US Government on national security issues. S&P Global was actually a Kensho client before the acquisition.
The acquisition further builds S&P Global’s AI profile. Last year, S&P Global led a US$50 million Series B fundraising round for Kensho, and began a collaboration with it to develop financial products. Earlier this year, the company acquired another Cambridge-based AI company, Panjiva, which uses machine learning techniques in global supply chain management.
“Kensho’s capabilities are critical for S&P Global to be at the forefront of the technology transformation taking place within the financial markets, and will accelerate multiple commercial and efficiency opportunities,” says S&P Global Chief Financial Officer Ewout Steenbergen. “S&P Global’s strategy is focused on strengthening our technology capabilities across the enterprise.”
According to an S&P Global press release, Kensho will continue to operate independently in Cambridge. Daniel Nadler, a Harvard graduate who founded Kensho in 2013, will lead a team of 120 employees, and report to Steenbergen.
Over the last few years Wall Street has discovered how well AI can perform in managing financial portfolios, automated trading, online fraud detection detect, and predicting lending and insurance trends. Assets in quant funds, which employ AI for quantitative analysis, have grown to US$940 billion, a 86 percent increase since 2010, according to Bloomberg.
One can now hardly find a relevant bank or investment institution that is not using AI. In 2018, three-quarters of banks financial services companies will be either already employing or introducing AI technology in their operations, reports Greenwich Associates, a top market intelligence advisor to the ﬁnancial services industry.
Ant Financial launches last funding round before its IPO
China’s financial industry has also been aggressively embracing emerging technologies and AI for years, gestating the world’s most valuable financial giant Ant Financial, an affiliate of China’s Alibaba Group.
Ant Financial officially launched its last round of financing yesterday in advance of an IPO anticipated this year or next. The Financial Times reports that the company is seeking US$5 billion, which would bring its value to US$100 billion.
Just a month ago, Ant Financial’s parent company Alibaba announced it would acquire a 33 percent interest in Ant Financial in exchange for Alibaba IP rights.
To date a wide range of digital financial service providers have spun out of Ant Financial: Alipay, Ant Fortune, Zhima Credit, MYbank, Yu’e Bao, Ant Credit Pay (“Huabei”), Ant Cash Now (“Jiebei”) and more; with the network reaching over 520 million users in China and the world.
Ant Financial bills itself as an AI innovator, implementing machine learning in almost every corner of its ecosystem. The company’s flagship financial intelligence platform Antzero develops reinforcement learning, deep learning and unsupervised learning solutions to revamp banking, insurance, and investment companies. Antzero’s AI-driven car damage assessment system for example can detect vehicle damage and provide an estimated repair cost, while its struc2vec framework-based AI model delivers outstanding performance in malicious account detection.
Today’s announcements illustrate how both established and emerging fintech companies are finding and scaling solutions and growing their businesses by investing in AI. It’s a trend that shows no signs of slowing down.
Journalist: Tony Peng| Editor: Michael Sarazen