Toronto-Dominion Bank (TD Bank) has purchased artificial intelligence (AI) technology startup Layer 6, a growing sign that banks are turning to new technologies in an effort to survive the cut-throat competition in the financial services sector.
Toronto-based Layer 6’s platform uses AI to analyze data, helping banks to serve customers in a personalized way. The new technology also helps banks assess the creditworthiness of customers, besides indicating whether they are looking for a loan.
The startup, with just 17 employees, won an international competition last August for the best recommendation system in the RecSys Challenge, an annual research competition that was previously awarded to teams from Alibaba Group and Russian software giant Yandex.
Analysts say TD Bank may soon offer product recommendation services for retail banking customers.
Founded barely a year ago, Layer 6 will retain its brand name and separate office in Toronto’s Yorkville area, but TD will become its sole client and customer.
“Layer 6 adds new capabilities to TD’s growing base of innovation talent and now-how,” said Michael Rhodes, Group Head of TD Bank. “Artificial intelligence has the potential to power a new generation of data-driven applications from personalized and real-time advice to predictive analytics that will shape the future of banking for millions of individuals.”
Canadian banks are increasingly investing in new technologies. Royal Bank of Canada (RBC) is setting up AI labs in Toronto and Edmonton, as well as one in Montreal. Last January, RBC hired AI pioneer Dr. Richard S. Sutton as an academic adviser.
This is not TD Bank’s first investment in new technologies either. Late last year it struck a deal with US-based Kasisto to integrate its KAI Banking chatbot platform into its mobile app.
TD and RBC are partners at Vector Institute, an AI research unit funded by Canadian government to stimulate the market for the new technology. The institute is reportedly set to receive US$80 million from more than 30 private sector companies.