Guernsey: Understanding Artificial Intelligence (AI) And Its Capabilities

Last Updated: 8 November 2017
Article by Sam Berry

Most Read Contributor in Guernsey, September 2018

Artificial Intelligence (AI) may be finance's current buzzword, but despite its popularity it is not the answer to all its problems. Much like its bed-fellow, Big Data, there is a tendency for many to identify AI as the solution before they know what the problem is, writes Sam Barry, Chief Executive and Co-Founder of Savernake Capital.

Latest research shows the number of AI companies founded in the UK doubled in 2014–16 compared with 2011–13, with a new AI company launching almost every week. In an information-rich age where data is power, it can be tempting for companies to consider whether they can use AI, over whether they should.

Savernake Capital is a fund management company where trading is done systematically by computers rather than humans. Its sister tech company is dedicated to managing its underlying infrastructure and architecture.

We fully embrace AI and machine-learning concepts in several of the key components of our trading architecture – but only where these techniques are the best way to solve particular problems.

Understanding and interpreting the data

When we started designing trading systems over 10 years ago, our core focus was the adaptability of our systems to ever-changing market conditions. The ability to evolve and advance is critical in today's markets. Information has become so vast and readily available that understanding the data can have incredibly wide-ranging interpretations and outcomes.

It had become a challenge that was far beyond what existing technology could achieve, requiring more innovative ways of processing that data. This is where AI becomes an essential part of our research and development.

The Savernake tech team has been working with AI concepts for several years, and we break their application down into three core areas:

  • Finding solutions and patterns in vast informational spaces. AI can help identify patterns in what would otherwise be considered 'noise'.
  • Adapting systems. We use key AI techniques to change our systems dynamically and decide where we focus our time and allocate risk, identifying the greatest potential future return.
  • Helping us build components and functions. We utilise machine-learning techniques to improve our own methods within the system. This helps us make accurate predictions, estimates and calculations.

Asking the right questions

The perpetual challenge with using AI techniques is that the answers they provide are intrinsically linked to How they are used, trained and developed into solutions, and therefore can result in seemingly useful but irrelevant answers.

Understanding, interpreting and applying these techniques becomes the key to obtaining any useful information from them.

Many problems we see in processing and understanding data do not require the use of AI. In many cases, more conventional statistical methods provide better solutions. For the innovation does not lie in simply using AI but in how to direct it, to teach it, to enable it to learn and to provide it with the information it requires. In other words, what is it looking to achieve and how does it know if it is right or wrong?

It is more important to understand the question you need answered and what information will lead you to that answer. If these are well understood then the right algorithm, solution or model is typically available.

At Savernake, we spend most of our research and development (R&D) time focusing on how we break down problems into smaller questions, then identifying the information required to answer them.

As an example, the question 'what statistical models are likely to perform well over the next six months given market conditions?' would become:

  • What are the current market conditions?
  • Do the current market conditions have any correlation to market conditions for the next six months?
  • What indicators correlate to how markets will most likely behave over the next six months?
  • What is the correlation between statistical model performance now as compared with six months' time?
  • What scoring functions offer the best correlation to future returns?

Redefining this problem allows us to apply various AI and conventional techniques to solve the smaller challenges. These allow us to build a far more dynamic and better view of the problem and understand how it changes over time; it also allows us to target specific techniques to the different questions.

Just as important, it allows us to define where existing techniques will prove much simpler and just as successful as AI.

Maintaining a human touch

The human element in this process should not be overlooked. For it is in these tasks that our innovative tech team proves integral in breaking the problem down, defining the questions, deciding whether AI can and should be used, and then interpreting the answers.

The renowned cognitive scientist Marvin Minsky, who co-founded the Massachusetts Institute of Technology's AI laboratory, believed that 'the power of intelligence stems from our vast diversity, not from any single, perfect principle'.

Here at Savernake Capital we embrace that diversity, and acknowledge that the use of Artificial Intelligence will only ever succeed when it has the best human minds employing it.


What is artificial intelligence

  • Artificial Intelligence (AI) describes the theory and development of computer systems able to perform tasks that normally require human intelligence.
  • AI is not a new concept, though the arrival of 'robo' apps has brought it to the fore of public awareness. This means that many people instinctively link AI with robotics.
  • In fact, AI can simulate many human traits, such as knowledge, perception, reasoning, learning, planning and problem solving.
  • At Savernake Capital we use machine-learning technology; a type of AI that provides computers with the ability to learn, solve problems and take actions without being explicitly programmed.
  • This ability to use learnt behaviours on new problems is what separates AI from traditional complex processes and statistics.

An original version of this article was first published in the 2016/17 edition of the Parliamentary Review, September 2017.

For more information about Guernsey's finance industry please visit

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions