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Role of artificial intelligence in impact investing

Role of artificial intelligence in impact investing

Expert opinion
CEO, Jersey Finance

While artificial intelligence (AI) is often thought of as an almost science-fictional term, it is slowly being drip-fed into our everyday lexicon and activities, perhaps without us really noticing, and it’s time we understood its true impact.

AI was a hot topic at our annual private wealth and funds conferences in London this year, with Professor Nick Bostrom both inspiring and challenging us all at once with his insights. The Oxford University professor and author of New York Times bestseller, Superintelligence, highlighted the strides being made in the world of AI and machine-learning, making important links to the world of investment and private wealth.

As he points out in Superintelligence (2014), “We find ourselves in a thicket of strategic complexity, surrounded by a dense mist of uncertainty”, which is where AI is likely to come in so handy in many scenarios, not excluding impact investing.

While computers have for a long time been smart enough to calculate quantifiable information, such as in an excel spreadsheet, much more quickly than the human brain can, there has been an obvious gap in the ability to calculate qualitative information. However, with technology and machine learning developing as quickly as it is, more lateral tasks which humans have dominated for a long time may soon be assisted by our robotic counterparts.

In Jersey, AI is really making a stamp on the private wealth sphere. In a recent video we produced about the impact it’s having on Jersey as an International Finance Centre (IFC), Symon Stickney, Founder and CEO of ISG Global, pointed out that “(They) use a lot of machine learning and AI as a way of reducing human risk, of being less subjective, and using that to quantify results and outcomes in a very transparent way.” For the world of impact investing, which cannot economically or morally afford to take risks in terms of wealth, this is really important and we are proud to be able to support such innovative thinking as a leading IFC. For an island of nine-by-five miles, we certainly punch above our weight when it comes to digital evolution, with a world-class infrastructure in place to support innovation and technology, and a positive, forward-thinking business community to help carry these ideas into the future.

So, where can AI help impact investing, and philanthropy generally? The possibilities are still expanding, but as Professor Bostrom illustrated in his presentation, AI is getting much better at matching traits and pulling together information in a way that makes sense beyond the words and numbers traditionally required by a digital system. This means that when looking for an investment that matches your values and goals, the options presented will be much more likely to fit the bill, and the chance of economic and satisfactory return may also be higher. On the other side of the coin, charities are seeing the benefit in having the ability to make themselves more visible to the right donor or investor.

Jersey Finance has really been getting a foothold on the niche areas which are beginning to dominate the market. For instance, one focus group we recently held with Digital Jersey looked at ‘wealth tech’, and we examined what the trends are doing and how they are likely to impact on Jersey. This deeper understanding is important to our development as a digital centre, as much as a financial centre, particularly since the future of philanthropy and all private wealth investing is looking increasing in that direction.

The bottom line is, we humans make the best judgements we can in our chosen field, but with the right technology we will soon be able to delegate those tasks which involve risk, and thus enhance our own skills and expertise. Instead of being afraid, let’s be excited about the age of AI, and like any tool it’s about how you use it – philanthropy is certainly a very good cause for this, and Jersey is ready to embrace it.