AI As Startup Catalyst: What It Can And Cannot Deliver

20.02.2023
Interview of Spiros Margaris by Joe McKendrick (Forbes)

Are we at risk of relying too much on artificial intelligence to generate and push through innovation? Possibly. But innovation is difficult to automate — after all, a lot of innovation springs from serendipitous encounters and events between humans. 

AI, for all its potential power, will only play a supporting role in the innovation that creates or moves businesses forward. “AI cannot fully systematize the accidental discoveries and relationships that are often at the heart of breakthrough innovations,” says Spiros Margaris, founder of Margaris Ventures. “While AI is a valuable tool for innovation, it should be used in conjunction with human skill and creativity to ensure a holistic approach.”

Still, “many companies will aim to systematize the innovation process with AI and employ a standalone solution,” he continues. “I will always argue for an innovation process that includes humans.”

We turned to Spiros to get his view on the ways AI is helping to boost business formation or innovation. As one of the top global fintech venture capitalists — as well as top fintech and AI influencer — he is a senior advisor to, and investor in, several fintech, insurtech, cybersecurity, health care, and AI sector companies, including two FinTech start-ups with valuations of over $1 billion.

There is a key role AI plays in today’s innovation, he notes. “We have already seen generative AI helping companies innovate by making it easier, cheaper, and faster to experiment with new ideas. These models are extremely beneficial for creating new products and improving existing ones, enabling companies to quickly test different options and find the best solutions.”

At the same time, he adds, “AI is just one of many tools that can be used to innovate. In the future, AI innovation will involve a combination of AI-driven insights and human creativity and intuition.”

AI will foster innovation and efficiency, which is essential not only for businesses but also for startups and new companies. “AI’s ability to process and analyze vast amounts of data can generate more accurate business insights and strategies,” says Spiros. “In a competitive marketplace, this is essential for both established and new businesses. Moreover, AI is critical for tasks that require considerable data analysis and automation, such as customer segmentation, market analysis, and operational efficiency.”

With AI facilitating increasingly sophisticated data analytics, “companies will be able to test and fine-tune business initiatives to produce offerings that are more compelling to customers than those offered by companies lacking such insights,” he explains. “The development of AI-powered personalized customer experiences remains in its nascent stages but holds immense potential for the future.”

AI is playing a role in assisting emerging fintechs — as well as existing banks — to build better offerings. “We have already seen AI’s impact in several areas of the financial industry, including credit scoring, fraud detection, risk management, KYC — know your customer — and personalized customer service,” Spiros says. Upcoming iterations will “enable companies to make informed decisions, streamline processes, and offer more personalized services. This technology will also lower costs for financial services while increasing access to traditional banking options.”

In the process, AI will help to “further democratize financial services, making them even more accessible and affordable to a broader range of people,” he explains. “This democratization will be particularly beneficial for the less privileged, who traditionally face barriers to accessing these services due to their cost and complexity.”

The fintech industry “has excelled at democratizing the financial sector, and ever-more powerful AI models will enable the industry to accelerate the democratization process,” Spiros adds.

Still, AI must be approached cautiously, he warns. “Regardless of AI’s potential benefits, companies must consider its ethical and regulatory implications, including privacy, security, and fairness. Using AI effectively requires a thoughtful approach to ensuring data quality and ethical practices to avoid flawed results and possible lawsuits.”

“We will always need to understand how an AI model makes a specific decision,” he adds. “Indeed, AI model transparency is essential to ensuring that models do not contain biases that are intentionally designed to harm certain individuals.”

Entrepreneurs and companies “must ensure that the data used to train AI models is as unbiased and accurate as possible. Companies that misuse AI are likely to suffer detrimental consequences.”

It should also be remembered that AI “can’t solve every problem,” he states. “That is, they shouldn’t think of this technology as a magic pill that can fix everything. AI should complement rather than replace human skills and creativity. A robust business model must balance AI’s capabilities with human intuition and innovation.”

Published in Joe McKendrik (Forbes)