Meet iris™: the AI engine set to revolutionize the IR space
17 January 2018
By Lorena Reyes
Earlier today, Q4 introduced iris™: a new AI engine for investor relations that integrates machine learning, big data analytics and NLP to analyze and process high volumes of fragmented market data. The result: improved investor engagement and shareholder quality, leading to lower volatility and higher multiples.
Phase one of this revolutionary product, available today in the U.S., is applied to Q4’s stock surveillance business, where it has been achieving accuracy levels of real-time ownership that, until now, have been unheard of in the market. And because of iris’ accuracy levels, Q4 has also announced its commitment to proactively report accuracy results to clients, along with a money back guarantee on maintaining accuracy above 80 percent.
We caught up with Adam Frederick, SVP, Intelligence to understand how iris originated, its future role in IR and how AI is changing the capital market landscape.
Lorena Reyes (LR): This is a very exciting day at Q4 with the release of iris into the marketplace. Tell me about iris.
Adam Frederick (AF): iris is the culmination of three years’ worth of development by Q4’s quant team, our experienced analysts, market experts, and former floor traders. It initially began as a way for Q4 to better monitor real-time trading flows in both the options and equity markets. But over the past 12 months, iris has transformed into a fully-functioning AI-engine that drives the entire Q4 intelligence platform.
(LR): iris’ accuracy is unheard of in the market and changing the game. Perhaps the biggest impact to the market is Q4’s accuracy guarantee. I’ve got to ask: how and why?
(AF): Within the first several weeks of putting iris to the test, and then backtesting her results, we were witnessing a level of accuracy never seen before in the industry. We found that our average accuracy in predicting shareholder activity was north of 80 percent for all US stocks, regardless of business cycle, macro-environment, sector or market cap. The intelligence produced by iris is accurate, there is no denying it. So why not stand behind our data, and be accountable?
Q4 is the only surveillance provider to officially guarantee its accuracy by self-reporting on it to clients each quarter, and, on the off chance we fall below our guaranteed target, we offer a rebate. This ultimately makes Q4 accountable and gives our clients the piece of mind to know they are getting a quality product that their provider stands behind. It allows IROs to feel confident in our data, and pass the intelligence upstream to their management.
(LR): Why has nobody historically been able to stand behind this data?
(AF): The reason no other surveillance firm has been able to make this kind of claim is that the model hasn’t lent itself to it. Traditional stock surveillance is only as good as the analyst and limited to the amount of data he/she can digest. With humans there is room for error and subjectivity. But an analyst armed with iris – now that changes the game.
(LR): AI technologies are changing many industries, and the way people work. How is AI impacting the IR landscape?
(AF): Q4 has been the leader in bringing AI and other innovative technologies to the IR space. That said, leveraging AI within the IR Workflow is still a very new concept, and I believe we’re still only touching the surface of what we can do with it. To date, we’re seeing the most significant advancements in shareholder monitoring (stock surveillance) and market structure analysis (deciphering order flow characteristics & drivers in real-time). With the traditional surveillance model an analyst is typically able to look at a few hundred lines of data, for 8-10 companies, in an average work week. Conversely, AI-driven intelligence, such as iris, sifts through millions of lines of data, and billions of individual data points, for thousands of stocks, in a matter of minutes. And as an added bonus to that, AI takes out the human bias and subjectivity. Therefore, our results are not only deeper and more informed in their basis, but decidedly more accurate as well.
(LR): We talked about how AI is changing the IR landscape. Can you talk to how it’s changing the way IROs work?
(AF): With better accuracy comes intelligence that an IRO can truly trust and act upon. Additionally, and this is important to note, iris is not only driving Q4’s surveillance efforts, but in utilizing machine learning and big data analytics, we’re able to empower our clients with deeper insight into such areas as: trading dynamics, market structure analysis, short-selling, sector rotations and trends, predictive analytics around shareholder sentiment and market expectations, forward-looking trading assumptions, etc. The sheer volume of data ingested and analyzed by iris daily is unmatched, and her results speak for themselves. It’s accurate, actionable intelligence that arms IROs with a real-time feedback loop, which leads to better stakeholder communications and messaging, lower turnover and dampened volatilities, and ultimately, higher multiples. In short, AI is improving the efficiency and effectiveness of the IRO Workflow.
(LR): How does iris differ from what is out there?
(AF): Artificial Intelligence is a term that is too often thrown around. For instance, having an algorithm that can decipher if/then statements to produce “AI-targets,” is nothing revolutionary. Technology like that has been around for 20+ years. What’s different about iris is that she is an intelligent being; the brains behind Q4’s Intelligence Platform. The system learns, and gets smarter as time goes on. It infers and makes interpretive decisions. AI-platforms, like iris, anticipate and predict what’s to come next – both from the market’s standpoint, as well as in how the IRO is likely to react.
(LR): We’ve now released phase one of iris. What’s next?
(AF): Without giving too much away… In the future, AI-driven platforms will empower IROs with easily digestible intelligence, proactive next-step workflow suggestions, and complete transparency around shareholder engagement success or opportunities. In a true AI-platform, the IRO no longer is at the center of the process, driving the steering wheel from module to module. Rather, the platform itself, this intelligent being, has the controls. The platform will make smart and intuitive suggestions, anticipating your every move, and allowing you to focus on what matters most – driving value, and expanding market multiples.