vk.com/id446425943																																															21
	March 2018														Citi GPS: Global Perspectives & Solutions
															Industrialization of AI – Spending and Investing More
															Banking & Securities Is the Largest Non-Tech Industry for AI
															Outside the tech sector itself, financial services is one of the leading early adopters
															of AI. According to the IDC, the banking and securities sector is not only the biggest
															spender on external AI services but is also expected see fast spending growth over
															the next five years. Most bank investments are focused on risk management, fraud
															prevention, and compliance activities.
															Figure 12. Market Sizes for Various AI Vertical Markets (2016-2019E)
																	$8,000
																	$7,000
															Millions		$6,000
																	$5,000
																	$4,000
															In		$3,000
																	$2,000
																	$1,000
																				$0
																						Telecommunications		Education		Utilities				Insurance		Transportation	Government				Manufacturing			Retail			Other Industries	Healthcare			Banking& Securities
																												2016				2017E		2018E					2019E
															Source: IDC, Citi Research
															AI startups seem most focused on applying AI solutions to verticals such as FinTech,
															insurance, healthcare, cybersecurity, and developing general-purpose/predictive
															analytics. Within FinTech, we are seeing use of AI for credit scoring/direct lending,
															regulatory/compliance & fraud detection, business finance & expense reporting,
															insurance, quantitative & asset management, assistants, and personal finance.
															According to data from CB Insights, total AI funding in 2017 reached $15.2 billion
															(+144% year over year), spread over 1,349 deals. By geography, the U.S. still leads
															globally in terms of the number of AI startups and total equity deals but is gradually
															losing its previous overwhelming dominance.
	Figure 13. Artificial Intelligence – Funding and Number of Deals																							Figure 14. Artificial Intelligence Funding by Geography, 2016
						Disclosed Funding ($ bn)										Deals				1,349										U.S. deal share										Non-U.S. deal share
																									23%
													888																		25%						31%						38%
																																															50%
						482			635
																									77%						75%
310																																					68%						62%
																																															50%
			$1.7bn					$3.5bn		$4.6bn			$6.3bn							$15.2bn
2013						2014			2015				2016							2017					2013						2014						2015						2016				2017
	Note: Excludes hardware-focused robotics startups
	Source: CB Insights, Citi Research																							Source: CB Insights, Citi Research

© 2018 Citigroup

vk.com/id446425943

22

Citi GPS: Global Perspectives & Solutions

March 2018

AI in the U.S. is dominated by tech companies such as Amazon (predicting and

analyzing customer shopping patterns); Google (strong AI push, acquired 50+ AI

startups in 2015-16); IBM (high-profile Watson AI service); Apple (acquired four AI

startups in 2015-16 for its digital assistants, facial/voice recognition); and Facebook

(analyzing big data on social media).

AI in China is driven by the three Chinese tech giants – Baidu, Didi, and Tencent –

that already possess advanced image/voice recognition and have set up their own

AI research labs. Chinese financial institutions are also active here, with players

such as Ping An utilizing AI for customer service, investments and insurance

products, and fraud detection in the cards business.

Rising M&A – BigTech giants such as Google, Baidu, Apple, Intel, Facebook and

Microsoft have increased their focus on AI, with more spend on internal R&D and

deployment as well as targeted acquisition of startups. Since 2012, over 300 private

firms using AI across different verticals have been acquired, not just by BigTech

companies but also by traditional insurance, retail, and healthcare incumbents.

Figure 15. AI-related Merger & Acquisition Activity

M&A Deals

115

80

39

45

22

11

2012

2013

2014

2015

2016

2017

Source: CB Insights, Citi Research

Race for patents – The number of AI-related patents filed by tech giants has

steadily increased since 2014, with leading players such as Google and Microsoft

filing as many as over 300 patents, individually, since 2009. By geography, we find

U.S. and Chinese companies on top with the most registered patents.

Figure 16. AI Patents Filed by Tech Giants

Figure 17. Patent Application Priorities

Microsoft

Amazon

Apple

Google

Facebook

Google

Amazon

Facebook

Apple

Microsoft

175

AI / Automation







150

Behav ioral Analy tics







125

Cy bersecurity











100

Hardw are









75

Cloud Computing







50

25

Mobile







0

Unmanned Aerial Vehicles









2009

2011

2013

2015

Nov'17td

AR / VR









Source: CB Insights, Citi Research

Source: CB Insights, Citi Research

© 2018 Citigroup