July 10, 2024
Vector databases are impacting all aspects of life, including the business world. However, explaining what a vector database is to a non-tech person can be challenging. Often, it is easy to explain what they do and how they're disrupting the world around us.
However, it is important to understand in layman's terms what one is before you can fully appreciate what they can do within the world of business.
A vector database is a specialised type of database designed to handle, store, and retrieve high-dimensional vectors efficiently. Vectors are mathematical representations of data points in multi-dimensional space, often used to encode information in various fields such as machine learning, natural language processing, and recommendation systems.
Vector databases are optimised for operations like similarity searches, which involve finding vectors (data points) that are close to each other in the high-dimensional space based on some distance metric.
If that has left you scratching your head, it is perhaps better not to tell you what they do but to show you what they are doing. They currently help streamline and perform within different industries, and that is why they’ve been so disruptive.
Much depends on the type of business you're in. A vector database can provide significant advantages to businesses across various sectors by enabling more efficient and effective data management and utilisation. Data makes the world go around, but how does it make your world go around, and how does a vector database help you harness that data?
Here are some real-world examples illustrating how vector databases can profit businesses.
There are few better examples than the giants of Amazon and Alibaba when it comes to prime examples of utilising vector databases to enhance their recommendation systems. By representing products and user preferences as vectors, these companies can quickly identify and suggest items similar to those users have purchased before. How does this help? More relevant recommendations result in higher conversion rates and, therefore, more profit. A personalised shopping experience fosters customer loyalty and repeat purchases, which leads to more profit. It can also help with inventory management, which in turn is a great way to manage your business's financial health.
It isn't just direct sales recommendations where these databases come into play. Big companies can use vector databases to gain deeper customer insights and optimise marketing strategies; by analysing purchase history, feedback, and demographic data as vectors, they can deliver bespoke promotions and offers that resonate with individual users. This is especially effective within the supermarket sector, with companies like Walmart doing it efficiently. They can improve product placement and store layouts based on shopping patterns and preferences by interpreting the data with vector data.
Social media sites can leverage vector databases to improve content discovery and personalisation. While TikTok might be a little out of the normal business's scope, the same benefits are scalable. By encoding user interactions, content features, and preferences as vectors, a platform can ensure they deliver the right content with which a user interacts better. It is also possible to identify emerging trends and viral content faster, staying ahead of user demands.
How? The tech behind the theory is that by converting text, images, and videos into vectors, these databases can capture the contextual relationships within the content. This understanding enables businesses to detect frequently discussed topics and hashtags, for instance.
It is possible to use vector databases for fraud detection and risk management, and big companies such as JP Morgan Chase adopt emerging tech such as AI and vector databases do so with great efficiency. How does it help prevent fraud? One way is by assessing huge amounts of data to identify unusual patterns indicative of fraudulent activity in real time. A vector database can also help assess risk profiles more accurately, leading to better decision-making in lending and investments.
The entertainment industry is worth around £2.7 trillion today, making it the business most likely to be impacted by vector databases. While big companies such as Netflix leverage them daily, their use reflects what can be achieved on a smaller scale. By representing movies, shows, and music tracks as vectors based on features like genre, mood, and user preferences, they can increase user retention and optimise their content acquisition.
This is directly relatable to any business, especially in today's market, where content sells almost as well as physical products. Any company that sells content can use a vector database to help drive its development, creation, and acquisition towards increased profits.
