IBM's Watson to advise Wall Street

Citigroup Inc., the third-largest U.S. lender, is Watson's first financial services client, International Business Machines Corp. said last week. The supercomputer will help analyze clients' needs and process financial, economic and client data to improve digital banking.

IBM expects to generate billions in new revenue by 2015 by putting Watson to work. The innovation giant has already sold Watson's abilities to health-care customers, helping WellPoint Inc. and Seton Health Family analyze data to improve care.

Banks spent about $400 billion on information research last year, said Michael Versace, head of risk technology at International Data Corp.'s Financial Insights, which has done technology for IBM.

Watson the financial assistant will be delivered as a cloud-based service and earn a percentage of the additional revenue and cost savings it is able to help financial institutions realize.

Watson, including its work in the health-care and finance industries, will contribute "a portion" of IBM's target of $16 billion of analytics earnings in 2015, Saxena said.

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

Some of the biggest financial institutions have already built big data centers. IBM is competing with most other major innovation companies to sell them tools to analyze and use accumulated information, Versace said.

Watson gives IBM "a huge marketing edge" in the race among tech giants including Google Inc. and Microsoft Corp. to obtain intelligence for businesses by teaching machines to understand sentences and paragraphs to put it more exactly than searching for single words or phrases, said author Baker.