How AI Technology Is Reshaping the Finance and Banking Industrywstatic.asiae.co.kr/files/filedown.htm?fn=op_keynote... · 5 Deep Learning is Driving the Third Wave of AI Development

Confidential

April, 2019

How AI Technology Is Reshaping the Finance and Banking Industry Prepared by Xiao-i Corporation

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The presentation is prepared by Xiao-i Corporation and is solely for the purpose of corporate communication andgeneral reference only. The presentation is not intended as an offer to sell, or to solicit an offer to buy or to form anybasis of investment decision of any class of shares of the Company in any jurisdiction. All such information should notbe used or relied on without professional advice. The presentation is a brief summary in nature and does not purport tobe a complete description of the Company, its current or historical operating results or its future prospects.

This presentation is provided without any warranty or representation of any kind, whether expressed or implied. TheCompany specifically disclaims all responsibilities in respect of any use or reliance of any information, whether financialor otherwise, contained in this presentation.

Disclaimer

AI Technology is Driving the Forth Industrial Revolution

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Our Motto

“It’s not about what technology can do, but what we can do with technology.”

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A Glance at Latest China’s AI Landscape

Cognition (brain)

Image recognition

Voice recognition

Perception Action

Natural language processing (NLP)

Knowledge base

Robotics

Consumer

Enterprise

(002230 CH)(BIDU NASDAQ)(BABA NYSE)

(0700 HK)

(IBM NYSE)

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Deep Learning is Driving the Third Wave of AI Development

Deep Learning, as a representative of advanced machine learning, has sparked the third waveof the AI development

Deep Learning is a material breakthrough in AI methodology, granting computers the ability to discover rules, summarize past experience and learn by themselves

We believe, in the future, with the eventual realization of the Master Algorithm and Quantum Computing, AI+ Industries will be getting a lot more common

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Reasoning and Cognitive Development Is Evolving the Next Big Innovation in AI

Cognitive Computing is an

Innovation Accelerator that

focuse on reasoning and

understanding at a higher level

Powering digital transformation from enabling

IoT and making sense of

unstructured big data to next

stage security

Global spending on cognitive

systems expected to reach about

$31.3B in 2019

Source:, IDC, The New Physics of Financial Services(2018), World Economic Forum

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AI does not exist in vacuum. For example,

• Blockchain offers a source of immutable data that does not require centralized verification

• Quantum computing holds the potential to bring more secure blockchain

• Advanced quantum computing will allow AI to tackle new problemsthat were previously incalculable

• AI will enable increasingly complex and automated smart contracts tobe executed, allowing more blockchain use-cases to enter themainstream

• Cloud computing will provide both the data storage and the processingpower necessary to train new AI models

AI Capabilities Intertwine with Other Technological Innovations

Source: The New Physics of Financial Services(2018), World Economic Forum

AI is Redefining How Banks and Financial Institutions Operate

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Emerging Applications of AI Solutions in Financial Services

Portfolio Rebalancing for

AI-powered ETFs

Personalized E-banking with

the help of Chatbot

Source: Boston Consulting Group

Market Sentiment

Analysis

Biometric Verification

CreditRating

Risk Management

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Scenarios - AI+ Fintech

UserContact

Web Tel otheroffline

……

AIability

AIdata

Strong calculation, low cost, virtualization, energy saving

Bank Knowledge Integration Management platform

NLP IVR Intel licenseComputer

visionBiometricsrecognition

Intelligentsearch

Machinelearning

Intelligent conversation

AIplatform

Intelligent scheduling

Businessmonitoring

Event capture

Unified access

Serviceinterface

Knowledgemanagement

Permissionsmanagement

Systemmanagement

Development framework

AI application

AI+

Service

AI+

Service

AI+

Riskmanagement

AI+

Business Hall

AI+

Investment

AI+

Display

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Traditional Chinese recognition

Mix of Chinese and English

Redirect to external API

Chit-chat

Smart Robot is defined as a professional banking service assistant, providing efficient, instant and accurate Internet bankingservices to clients, who could interact with the chatbot via different API, for instance WeChat. Xiao-i’s semantic analysis supportsSimplified Chinese, Traditional Chinese and the mix of both English and Chinese characters.

Chatbot is the Most Mature Application

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How AI is Transforming the Industry

Operation Level

Market & Regulation

Level

Society Level

From cost center to profit center

Self-driving finance

A new battlefield for customer loyalty

Collective solutions for shared problems

Bifurcation of market structure Uneasy data alliance

Finding a balanced approach to talent

Source: The New Physics of Financial Services(2018), World Economic Forum

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The Transformation Shifts the Competitiveness of Firms towards the Front Office

SF Express

• 90% of customer orders now handled by Xiao-i’s proprietary system, generating significant labor cost savings

• 180k of daily enquires handled

• 1,800 headcounts saved

Shanghai Pudong Development Bank

• Response to enquiry accuracy rate increased to 98% from 88% after adopting Xiao-i

China Merchants Bank

• Already reached 98% accuracy

• 1.95mm of daily enquires handled

• 9,500 headcounts saved

Ctrip

• 80% of online client inquiries now handled by Xiao-i

• 200k of daily enquires handled

• 1,500 headcounts saved

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85% of Customer Interaction

will be handled WITHOUT Human

Support

By 2020...

The Potential of Conversational AI

25% of Customer Service

Operations will employ Conversational AI

Technologies

18B The Market for

Conversational AI will Grow

Source: Gartner

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Failing to Embrace AI Technology Could Prove to be a Risky Move

• Failing to provide personalized experience in business

• Missing opportunities to increase sales

• Failing to leverage on data analysis forfurther optimization

• Struggling with competitions as AI gets cheaper and more accessible

Risks of Not Adopting AICutting Edges of AI solutions

• Highly personalized experience withlower cost

• Effective customer retargeting and abandoned cart marketing

• Facilitating decisions making

• Enhancing business efficiency, savingtime and energy for more value-addedwork

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What these Institutions Shall Built On in the future

Scale of Data

High Retention Benefits

Value of Augmented

Performance

Optimization& Matching

Tailored Experience

What does Xiao-i do03

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Knowledge Inference

Semantic Understanding

Context

Answer Organizing

NLP

IN OUT

Personalization

Knowledge

We Are the AI Business Brain

Human - Machine Interaction

Human - Machine Interaction

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1

2

3

5

4

Chatting

Bot

FAQ Bot

Deep Bot

Recommendation

Bot

Discovery

Bot

Core technologies - 5 Major iBot Technologies

• Key capabilities: chatting, personal assistance, for leisure

• Based on rule matching andsemantic matching

• Key capabilities: semantic recognition, semantic generalization ability, interest understanding, text correction and word-order semantic

• Based on deep learning and rule-based models

• Key capabilities: multi-turn dialogue, robot-guided interaction, contextual intent understanding and comparative reasoning

• Serves as initiative guidance of the dialogue process to grasp customers` demands accurately

• Key capabilities: intelligent suggestion, robot-guided recommendation

• Recommendation made based on users’ preference and business logic

• Key capabilities: reading comprehension

• Supports smart recommendation, turns passive CS to active marketing

• Recommendation made based on data crawling from unstructured data and historical log from both internal and external

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Core technologies- AI Data Analysis

InternetPosts |Comments

Interaction log

Calls |Voice |Text

Buried Data

Browse |Click |Jump

Trading

Purchasing |Channel

Document

Activities |Brochure| Regulation

Offline Data

Source Data Pool

Multi-type data interface |Storage

Data Center

Information Filtering

Information Storage

Data Storage and Data Roughing

Prediction

Text mining analysis

Similar Text Searching

Text Generation Document

Proofreading

Machine Learning

……

Marketing and Recommending

Scenario

Engine

Data Distribution

Text Categorizati

on

Business Data

Information

Extraction

SentimentAnaly

sis

Data Monitoring

Voice Recognition

User Portrait

iBot

Basic Product

Event Prediction

Task Assignment

Data Source

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Strong Sales Network and R&D Capacity Across Greater China

Guizhou Office and R&D Center

Shanghai Headquarter and R&D Center

Nanjing R&D Center

Beijing Office

Asia-Pacific Headquarters and R&D Center

Taiwan Office

Shenzhen R&D CenterGuangzhou Office

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Top 30 entrepreneur in China AI industry

Member of 4th Council of Shanghai Informatization Youth Talent Association

Max YUAN

Chairman & Co-Founder

Responsible for business strategies and international expansion

Leading AI expert in China

Currently attaining EMBA at Peking University

Previously at HP and Microsoft

Technology leader in China's AI development by Forbes

Director of Chinese Association for Artificial Intelligence

Dr. Pinpin ZHU

CEO and Co-Founder

Responsible for strategic development, operations and technology

AI expert with >10 patents

Acquired PhD from China Academy of Science and Bsc from University of Science and Technology of China

Senior management previously at IT giants including Microsoft, eBay, and Apple

600+ employees, > 60% being R&D researchers and engineers

One of the earliest AI R&D teams in China

Many professionals have been growing with the Company for more than 15 yearsExperienced Team

Visionary Management and Experienced Industry Talents

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Credentials - Banking & Finance

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Satisfied Clients Spoke for Ourselves

Clients are satisfied with Xiao-i's hybrid approach, which is proven by

the low churn rate1 of less than 5%, and track record of winning the competition2

E-commerce, manufacturers, logistics and transportationMobile Carriers

Government agencies

Guiyang government

General Administration of Customs, PRC

State and Local Taxation Bureau of Shanghai

Shanghai Science and Technology Committee

Ministry of Industry and Information Technology,

PRC

Chengdu Administration for Industry & Commerce

Note: 1. Defined as the percentage of Xiao-i's clients who stopped using Xiao-i's product and turned to other service providers

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Market Endorsement

2016Along with Siri, Cortana and Amazon, Xiao-i was recommended asan example of Conversation+ on Gartner Symposium 2016

2017Listed as a representative of VCA vendor, Xiao-i and IBM,Microsoft and other digital giants drive global AI development

2018 Included in “A Market Guide of Conversational AI in China”

2018 CLSA ranked Xiao-i as #1 Player in NLP and Applications in Chinain Dec 18

EY Fudan Most Promising Chinese Enterprises Award 2018

Frost & Sullivan China New Economy Award 2018

Gold Award 16th China International Industry Fair

Future Opportunities 04

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According to Gartner, human call center agents may no longer exist in 5 years 3

Current intelligent customer service penetration is only 0.2%, with great growth potential5

Up to 5mm customer service agents in China could be replaced by intelligent customer service in the next 3-5 years

The market size of China intelligent customer service market is expected to be around USD 2.2bn by 2022

(USDbn)

Market size of China intelligent customer service market

0.1 0.1 0.2 0.2 0.4

0.7

1.2

2.2

2015 2016 2017 2018E 2019E 2020E 2021E 2022E

Deepening AI Penetration

Source: Company info, Frost & Sullivan (F&S) industry report, UBS Wealth management, Gartner, McKinsey, Fx rate USD/RMB: 6.91

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Xiao-i as the Pioneer in Developing NLP Industry Ecosystem

iBot Open Platform

Registered Users

Industry needs/ data/ projects

Voice

Text

Image

Empower the industry with cutting edge technologies

Chatting bot FAQ Bot Discovery Bot

Enable multi-channel expansion via API

Mobile Website WeChatSocial media

AI+ CS

AI+Marketing

AI+Hardware

AI+Outbound

Mature Application

Ready-to-launch Applications

Deep Learning Big Data

Cloud Computing

NLP

Image Recognition

VoiceRecognition

Data

Enhancing the Open Platform’s capabilities with machine learning and big data analysis

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Future Roadmap

Solution

Industry

Language All major languages including Chinese, English, Spanish, French, Japanese…

Providing 500+ solutions in the future

Across all major industries

Joint Lab established with HKUST for future collaboration in researching and developing

More than HK$100 million to be input for developing products of Cantonese and other languages

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Powerful Supercomputing and Big Data Analysis Propel AI Development

Widespread AI Applications

Powerful Big Data Analysis

The Rise of Intelligent High Performance Computing

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Embracing AI Technology for the Future

Together we create and win共创、共赢