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Syntelligence programsa lender's logicinto artificial software

A banker in a boxBy G. Pascal ZacharyMercury News Business Writer

cally has pioneered the use of computers in business,credit and underwriting assessment are two criticalfinance activities that have not been automated."There's nobody else out there that is doing this," saysCarol Weiszmann, editor of a newsletter on artificialintelligence markets M Natick, Mass. "Syntelligenceis unique.**

Hieprice tag is high

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thefirm's Lending Advisor

Sheldon Bremer seems like a character from anadventure movie — areal-life Indiana Joneswho is asmuch at home traversing a Mexican jungle as he isrunning a computer software company.

A respected geophysicist and the author of a lead-ing textbook in his field,Breiner has been called "theworld's foremost finder of lost and buried objects." He credit analysis package will cost a bank at leasthas discovered, among other things, remnants of an- $500,000 initially — but players in the financial ser-cient civilizations, avalanche victims, and nuclearsubmarines. His home in Portola Valley, less than 300i^^^memiWm^^^ yards from the San Andreas

is virtually a seismologytation, where Breiner monitors

1 quakes from around the globe.; And to relax, he runs. Mara-

vices industry already are eyeing Syntelligence'sprSiJlw^.l "This offers a new possibility of analyzingan old science/ says Frank Abraham, senior vicepresident for credit policy at Security Pacific Bank,which is considering buying Lending Advisor.

The lending software, of course, doesn't make cred-it decisions on itsown; it Organizes loan files,crunchesnumbers and poses critical questions about individualborrowers or applicants. A simple wayof looking at

thons.With his Indiana Jones-curios-

ty, it was not surprising that therelationship between the loanofficerand an artifi-jjk reiner would embrace artifi- cjal intelligence program is to envision a footballiy cial intelligence, a new frontier quarterback and his coach. Although even experi--I|H 1for computer explorers that en- enced quarterbacks such as the 49ers* Joe Montana

Wk ? I dows software with humanlike r]on't call all their own plays, they can always changewmmmmmm judgment for making decisions, the coach's play before the snap.Bremer Heran an oil exploration-equip- Similarly,a loan officer may override his comput-ment firm in Sunnyvale in the 1970sand was familiar cr>s own decision on a lending question. Syntellig-with Prospector, an early AI computer program de- ence's software even provides a handy computerizedsigned to aid geologists in exploration. At the time, memo to explain the reasons for the exception.Breiner thought designingcomputer programs to helpprospectors find minerals was "a crackpot idea," herecalls. "I thought it would never work."

"The computerized software can get the officerpast the paper Work," says Samuel Tallman, a groupvice president with First Wachovia of Winston-Salem,N.C, the man who provided some of the "expert"knowledge Of credit analysis on which the software isHe's a convert

But by the time he left his exploration firm in 1983 based. 'That will free the officer to devotemore time— he sold out to a larger firm for $40 million, he says to subjective analysis."— Breiner had become an artificial intelligence zeal- Nevertheless, Tallman concedes that loan officers,ot. Teaming up with Peter Hart, a former SRI Inter- accustomed to sizing up borrowers with their gut,national engineer who had overseen the development not embrace Lending Advisor. "Some will wel-of Prospector, and a few other AI researchers, Brei- c^e it — and use it avidly," he says. "But others willner launched Syntelligence.

The company, which introduced its first two prod-ucts last fall, makes "expert systems," which arecomputer programs that help people reach technicaldecisions. Expert systems don't actually think forpeople but instead answer a question by making aneducated guess. The computer bases its answer onstored information and rules of thumb from humanexperts that have been codified in the expert systemsoftware.

see it as an impediment and shun it."With giant loan losses wiping out earningsat many

banks, loan officers may find that management willadopt Syntelligence's package simply to raise lendingstandards. At least one major bank already has or-dered its top lenders to train on the expert system.Big banks mean credibility

A handful of firms across thecountry have broughtexpert systems to market, but none has entered Syn-telligence's niche. The Sunnyvale firm, which has

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The involvement of WeHs Fargo Bank and FirstWachovia Bank, two of the nation's best-run re#onalbanks, in the developmentprocess also has piqued theinterest of bankers. "That lends credibility," saysSecurity Pacific's Abraham.

Annther nlus: Unlike most other expert systems

HenryRNaDirector SysCity and CoiAge: 58Budget: $3(Cross Coun

boundaries. And wiials. Henry Nanjoancomputerprofessio:track in America's 1;than $120 billion eve

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Bremer would embrace artifi- a^ intelligence programVto ra^<^a7ortbailto«SS2?SI_IS £5^ quarterback andUs^ch. _th«S^_ _£££Lf°3^"fi?__s£: ■«*" quarterbacks such as the 4»er? Joe MontanaI .or compmer e*P orere mat

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gn^ quarterbacks such as the 49eiV Joe Montana C\Hr onrl CWj 3 fTL"0??"8 T* T?01*6 don't call all their own plays, the;

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But by the time he left his exploration firm in 1983 *Wf *?"*"" *-hesold out toa larger firm for $40 million, he says . 55L^2_l^^ to^^"^l~-Breiner had become an artificial intelligencezeal- S_^__i^?P' Mot. Teaming up with Peter Hart, a former SRI Inter- accSS^d^^Z^^^^t^'national engineer who had overseen the development ?ST" «Sl *$of Prospector, and a few other AI researchers^- ££?.?*"S^hlS^^^ Z*1*£ncr launched Syntelligence. g?s*^fflK*_^_ s£ff??'»^otherswffl

The company, which introduced its first two prod- "^t^lSfi!S2S_^/ ,nets test ftu^ niakes "expert systems," which are J^?^\^S^^& eara^ *f3^computer programs that hrfp people reach technical 11decisions. Expert systems do?t actually think tor SfiEtaSfffCS ""^P*?^*fi^S***people but instead aWr a question by

yirSg m S^^wSS^SSR ""2*0* °^educated guess. The computer bases ite answe? on der6d ltS top lenders to *"* on *** «^rtsystem,stored information and rules of thumb from human Bis banks mean credibility

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. . <fexpafcthat have been codified in the expert system b, tavolvem(art 0, Wells Fargo Bank and First TcSS'o,A handful of firms armss rh#» mnnrn;haw hw«.«hf Wacbovia Bank, two of the nation's best-nip regional oversee and cooiexp\rS^fto^^bSenTSSsSfi£ f **telligence's niche. The Sunnyvale firm, which has SS, itJS*^^ credibility," says on micros.

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tailoredits first oroducts to commercial loafoffeSs J&*!L?lvs[ most other expert systems behind. And spetailored its first products to commercial loa_ officers «£ SSISSffT?" TS^ **"*' . sp?at banks and insurance company underwriters. And JS&iSI crOSS cKtry skthe comoanv already has sisned tin a half-diS" ".its underwriting counterpart run on lnternational InformatZt^SZ^S%^^^^fSKKT to*"** ****» CorP/s "»_*«!» «>^Puters and wift individualvi

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which^^essentially maketools for appacatiOßSsoftwaredevelopers."In contrast to the first-generatiott tool makers

such as Teknowledge, which haVe fac^ difficultiesafter their initial successes," says Sy Kaufman, amanaging partner at Robertson Colman & Stephens,an investment banker In San Francisco. "I thinkSyntelligence is a whole lot more appealing."

■■ Hackers

Sales take time

J. Ennis Kirkland

Despite the interest, Breiner doesn't expect a rushof early sales, Even though IBM has agreed this,month to market Syntelligence'stwo packages, salesof the big-ticket products may well ramp up slowly."You've got to convince people to buy somethingthat's very expensive*" says Pierre Lamond of Se-quoia Capital, a MenloPark venture capital firm thathas invested in Syntelligence, "That takes some timeSales will grow slowly at first"Yet Syntelligence has a big bankroll Thecompany

has spent $15 million developing its products — anenormous amount for a software start-up, but thecomplexity of translating the expert systems fromspecialized computers to an IBM delayed theproductsat least a year^ Breiner concedes. But this month,Breiner won commitments from twoBritish investorsfor $3.2 million in venture funds and expects to closeon $2 million shortly.

"It's a big gamble," Breiner says soberly, whenthinking about his firm's prospects. But it seems agambleworth taking. Says venturecapitalist Lamond:"The market is huge. If this catches on, Syntelligencecould be a

$100

million company."