Narrative Science, which transforms data into narratives, is largely focused on assisting humans in wealth management. But a new opportunity is arising in automated investing, also known as robo advising, in regards to which Narrative Science is currently engaged in several meaningful conversations.
The robo advising world has been exciting this week, with Wealthfront CEO Adam Nash launching an attack on competitor Betterment, as well as the wealth management industry at large, and Betterment CEO Jonathan Stein firing back. The services, which offer wealth management services with lower fees and a lighter touch than the traditional players, have proven popular with tomorrow’s mass-affluent class: millennials.
“We’re an enterprise software company focused on licencing to financial institutions,” Chief Operating Officer Nick Beil told Bank Innovation. And while the possibilities are mind-numbingly wide for Narrative Science, it is currently focusing its product, known as Quill, on wealth managers, a narrow (but profitable) sector. Most of what the company does is provide language internally for advisors, and save wealth management workers from tedious tasks.
For example, one Narrative Science customer ran a quarterly reporting operation that took a considerable team of FTEs 10 to 15 days to complete. With Narrative Science, Beil said, the data is crunched and narratives are generated on Day 1. The humans can use the remaining time, or less, to fine-tune those reports and add nuances that are beyond Quill’s power, at least for now.
Its customers include 70 enterprises, including T. Rowe Price, Credit Suisse, USAA, and the CIA and Department of Homeland Security. How do these last two use Narrative Science? Sorry, that’s classified. Seriously.
Narrative Science has received $32.4 million in funding, according to Crunchbase. Its last raise was $10 million in Nov. 2014.
Another space seems like low-hanging fruit for the Chicago-based company — online brokerages, such as Personal Capital, Wealthfront, and Betterment. “Ever more, we’re talking to robo advisors,” Beil said. None of these currently provide natural-language reporting, he added.
As the quality of Quill’s product improves, and it is already indistinguishable, in limited contexts, from a well-written human report, competing solutions employing expensive humans will not be able to provide the same pricing structure, and eventually, may not be able to provide the same quality of communication.
At Next Bank USA in June, Moven CEO Brett King said that within the next several years, digital onboarding will become more attractive to risk managers than human-assisted onboarding, because humans are fallible. They spell things wrong. They are susceptible to social engineering. They are slooooowwwwww.
Narrative Science is investing in AML reporting this year. Robots win.
To be clear, Narrative Science, like its competitor Yseop, is not at this point today, nor does it claim to see it in its roadmap. Instead, the company the company is looking to serve bank compliance departments overwhelmed with regulatory demands. One large bank customer has to produce 6,000 reports a month for regulators. Beil refers to Quill getting “smarter” not in a Skynet-Terminator-self-awareness sense, but in an “assisted learning” environment.
It doesn’t take much of an imagination to see what the company can do. Chief Scientist Kris Hammond spoke to The Guardian recently about this. For example, did you know Narrative Science writes news articles for Forbes and TheStreet? Yeah. Here’s one of its stories.
We’re not worried, though. There’s not enough money in journalism for Narrative Science to go after.