THE ROBOTICS OF THINGS IN 2019

We’ve talked in previous posts about the advancements of robotics, as those have come along.

Here are two interesting new ways in which robots are being used, one in consumer affairs and the other in the medical field.  Discover Financial Services, which includes the Discover credit card, has begun using artificial intelligence to assess hundreds of personal loan characteristics about applicants who are making requests for loans.  It’s anticipated that the use of robots to do the assessments may well provide better odds for shoppers looking for personal loans.  For example, it’s said that in sifting through some of the unusual characteristics that might add up to getting a loan, one of them might be the fact that the applicant has a history of discount store shopping.  On the other hand, such quirks as writing the full legal name of an employer on an application will lower the chances, as will applicants reporting high incomes.  Beginning around mid-year, the new methodology, using robots, will be employed to sift through a wide range of input in order to determine the ranking of applicants.  For many years previous, lenders have used the information found on consumers’ credit reports and their scores, to assess prospective borrowers.  Gradually, the information used has come to include bank account balances and utility payments – with the intent of finding ways to approve more borrowers without generating greater risk.  And, Discover, in particular, has an interest in getting additional data sources into the mix – so that they can better understand the losses on personal loans that they are incurring.  Personal loans are the methods typically used by borrowers to fund home renovations, vacations and other miscellany.  To date, that market – at around $138 billion a year – has remained small compared to credit cards, auto loans and student loans which each exceed $1 trillion per year.  It’s a fair assumption, however, that the company will be writing off somewhere between 3 and 4% of the personal loans made each year.  Thus, improvements in the underwriting record would be a distinct asset to the company.  Discover is working with ZestFinance, purveyors of AI services, to perfect the lending approval process before going into full operation mode.  Zest has recently run a selection of personal loan applications from prior years through its system to look at what its system would have recommended, versus whether or not the loan was approved.  An interesting process – and one that seems a natural for a robot to sift through.  As was the case, back in 1998, when a start-up medical company, Intuitive Surgical, began to license a robotic surgical helper dubbed “da Vinci” to assist in surgical procedures, which, ultimately, resulted in the transformation of surgery in the same dramatic way that the iPhone changed cellphone use.  Today, there are 5,000 da Vincis in operating rooms used in one million surgeries per year and selling about $1,900. in additional medical replacement parts per surgery.  Thus, the company’s 30% net profit (which exceeds Microsoft’s) seems to speak well for its original decision to implement robotic use in surgical procedures.  Intuitive Surgical went public just after the tech bubble peaked in 2000, and, even so, the stock ended the decade 17 times higher than at its IPO. There is now some competition in the marketplace, however, including Medtronic, the medical device maker with sales 8 times that of Intuitive, and Verb Surgical (the partnership between Johnson and Johnson and Alphabet that we’ve discussed in previous posts) both expected to enter the surgery robot market in the next year.  And, for Intuitive, the challenges include the new entries into the market, as well as the fact that the company was the pioneer and, having been around for a number of years, has now saturated the original markets.  All of which will make both of these areas a continuing point of interest for the future.  We’ll keep both the commercial lending use of robots, as well as the emerging picture for the surgical markets on our radar.

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