IBM's Watson Computer Gets Wall Street Job One Year After 'Jeopardy' Win

International Business MachinesCorp.'s Watson computer, which beat champions of the quiz show"Jeopardy!" a year ago, will before long be advising Wall Street onrisks, portfolios and customers.

IBM expects to generate billions in new revenue by 2015 byputting Watson to work. The research giant has already soldWatson to health-care customers, helping WellPoint Inc. and SetonHealth Family analyze data to improve care. IBM executives sayWatson's skills -- understanding and processing naturallanguage, consulting vast volumes of unstructured information,and accurately answering questions with humanlike cognition --are also then suited for the finance industry.

Banks spent about $400 billion on information technologylast year, said Michael Versace, head of risk technology atInternational Data Corp.'s Financial Insights, which has doneresearch for IBM.

Watson the financial assistant will be delivered as acloud-based service and earn a percentage of the additionalrevenue and cost savings it is able to help financialinstitutions realize. Watson, including its work in the health-care and finance industries, will contribute "a portion" ofIBM's target of $16 billion of analytics earnings in 2015,Saxena said, and that portion will "have a B at once to it."

Watson may add $2.65 billion in revenue in 2015, adding 52cents of revenues per share, Ed Maguire, an analyst at CreditAgricole, estimated in a November technology note.

IBM, the world's biggest computer-services provider,reported revenue of $107 billion in 2011 and revenues of $13.06a share. The company ended 2011 with $11.9 billion in cash.

Some of the biggest financial institutions have alreadybuilt big data centers. IBM is competing with most other majortechnology companies to sell them tools to analyze and useaccumulated information, Versace said.

Watson gives IBM "a huge marketing edge" in the raceamong tech giants including Google Inc. and Microsoft Corp. toobtain intelligence for businesses by teaching machines tounderstand sentences and paragraphs in other words than searching forsingle words or phrases, said author Baker.

Parts of Watson could already be combined with other IBMtechnologies to help banks with regulatory compliance bysurveying internal documents and flagging those that seem amiss,Baker said. Watson was designed to be loaded with informationrather than grapple with a live streaming feed, making it likelyIBM will partner it with other technologies.

Beyond banks and other financial institutions, andinsurance companies, Watson may have applications fortelecommunications companies, and maybe even call centers,said Saxena, who joined IBM when it acquired his company WebifySolutions Inc. in 2006.

IBM plans to use Watson in financial services "by and large forportfolio risk management, they're not going to do stockpicking," Maguire said in a Feb. 17 phone interview. "Theythink that Watson can make a difference." On the whole, Watson isn'tperfect. It is weak in languages other than English, and itsprocessing of social media streams from platforms includingFacebook and Twitter can be sluggish. The lag is "gettingshorter", Saxena said.

Year ago last month

A year ago last month, about 15 million viewers watchedWatson beat former Jeopardy champions Ken Jennings and BradRutter -- a highly publicized victory in artificial intelligencethat IBM always aimed to apply to the business world.

Watson had to learn how people speak and write, andevaluate its level of understanding, said Eric Brown, a memberof the team that built him in an IBM technology facility in NewYork. Precise answers delivered with confidence distinguishWatson from Web searches, enabling the research to advisereal-life decision makers, Brown said.