Artificial Intelligence: What is AI and Where We are

In 1950, Alan Turing proposed a question in his paper “can machines think?”. This marked the beginning of the development of artificial technology. Today, AI has opened up new opportunities for progress in almost every field there is. However, in spite of the leaps that we have made in artificial intelligence, experts have failed to agree in a single universally accepted definition of what is artificial intelligence.

Artificial Intelligence program running in a laptop

For this purpose, we will define artificial intelligence as the ability of a system to perform tasks that normally require human intelligence. This includes, but are not limited to, data analysis, learning, planning, and the ability to generalize. For many, AI technology seems to be a tool exclusive to corporations, scientists, and tech corporations. In reality, artificial intelligence is present everywhere. From smartphones, watches, television sets and vehicles, artificial intelligence enables a number of features that simplify tasks, allow automation, and provide intelligent solutions.

According to John Launchbury, former Innovation Information’s director of the United States’ Defense Advanced Research Projects Agency (DARPA), the development of AI comes in three waves:

First Wave AI (Handcrafted Knowledge)

The first wave of AI is a form of technology that simplifies complex facts and rules and maps out the best possible outcome or steps that can be taken. This type of AI technology relies on human expertise to provide the system with the facts and rules of the process that it aims to improve. The system then works through all the possible outputs and make the best recommendations. Examples of which are systems that automate schedules of logistics companies, automated tax software, and virtual board game systems (e.g., Chess, Checkers, Go).

First wave AI handles narrowly defined problems efficiently. However, this type of technology has no learning capability; therefore, It cannot adapt to uncertainties or changes in the facts or rules, without human input. However, they are still relevant in improving processes, product testing, and identifying threats and opportunities.

Second Wave AI (Statistical Learning)

The second wave of AI is the AI technology that makes visual recognition, speech recognition, and other perceptive technologies possible. This wave in AI development works through complex algorithms to sort through big data and identify data from one another. Second wave data is powerful in going through vast amounts of data in a matter of seconds and classify them according to the output intended.

Additionally, second wave AI, owing to its nature as a perceptive technology, can also be programmed to learn and adapt from the new data that it receives. This enables the second wave AI to present reliable predictions by identifying patterns in large data sets.

While second wave data is excellent in perception and its predictive capacity, this AI development is not without caveat. Second wave AI can make calculations through perception, but it cannot perceive the context of the object being presented to it. This vulnerability can easily distort the system’s learning and perceptive capability.

These two waves of AI development fall under on what is classified as narrow AI. Narrow AI helps with the improvement of basic and complex human activities. This technology enables the conduct of fast, accurate, and highly specialized analysis, calculations, predictions, and recommendations. All current deployment and implementation of AI falls under this classification.

On the other hand, the third and future wave of artificial intelligence is classified as Artificial General Intelligence (AGI). AGI refers to the concept of AI that is capable of matching the full cognitive capacity of human intelligence. This technology would allow AI to perceive real-world phenomenon with the proper context. With this development, AI will be able to address the limitations of the first and second waves of AI development and perform tasks similar or even superior to any human being.

The increased interest in artificial intelligence research and development by leading countries, tech corporations, and academic institutions bring the third wave of AI closer to reality. Fields that are already working with AI are expected to be the first ones to utilize AGI once it arrives.

If you are interested in knowing the current use of AI in the finance and accounting (F&A) industry, we encourage you to read our Robotic Accounting Primer. This primer explains the benefits of having an AI in your F&A processes and how you can prepare your organization in incorporating artificial intelligence. You can download our Primer by clicking the button below.