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Natural Language Processing

April 6 2023

15 min read

From chatbots and sentiment analysis to document classification and machine translation, natural language processing (NLP) is quickly becoming a technological staple for many industries. This knowledge base article will provide you with a comprehensive understanding of NLP and its applications, as well as its benefits and challenges.

What is Natural Language Processing?

Natural Language Processing (NLP) is a branch of artificial intelligence that involves the use of algorithms to analyze, understand, and generate human language.

Just as a language translator understands the nuances and complexities of different languages, NLP models can analyze and interpret human language, translating it into a format that computers can understand. The goal of NLP is to bridge the communication gap between humans and machines, allowing us to interact with technology in a more natural and intuitive way.

How does Natural Language Processing Work?

NLP works by teaching computers to understand, interpret and generate human language. This process involves breaking down human language into smaller components (such as words, sentences, and even punctuation), and then using algorithms and statistical models to analyze and derive meaning from them.

What techniques are used in Natural Language Processing?

Natural Language Processing (NLP) uses a range of techniques to analyze and understand human language.

Two important components of NLP are syntax and semantic analysis:

Syntax analysis involves breaking down sentences into their grammatical components to understand their structure and meaning.

Semantic analysis goes beyond syntax to understand the meaning of words and how they relate to each other.

Other, related components of NLP include:

Parsing involves analyzing the structure of sentences to understand their meaning. It involves breaking down a sentence into its constituent parts of speech and identifying the relationships between them.

For example, in the sentence “The cat chased the mouse,” parsing would involve identifying that “cat” is the subject, “chased” is the verb, and “mouse” is the object. It would also involve identifying that “the” is a definite article and “cat” and “mouse” are nouns. By parsing sentences, NLP can better understand the meaning behind natural language text.

Stemming is the process of reducing a word to its base form or root form. For example, the words “jumped,” “jumping,” and “jumps” are all reduced to the stem word “jump.” This process reduces the vocabulary size needed for a model and simplifies text processing.

Segmentation in NLP involves breaking down a larger piece of text into smaller, meaningful units such as sentences or paragraphs. During segmentation, a segmenter analyzes a long article and divides it into individual sentences, allowing for easier analysis and understanding of the content.

What is Natural Language Processing Used For?

The business applications of NLP are widespread, making it no surprise that the technology is seeing such a rapid rise in adoption. Here are some of the common use cases for NLP in the workplace.

Categorization / Classification of documents

Classification of documents using NLP involves training machine learning models to categorize documents based on their content. This is achieved by feeding the model examples of documents and their corresponding categories, allowing it to learn patterns and make predictions on new documents.

Information and Topic Extraction

NLP is particularly useful for processing large amounts of unstructured data, such as emails, social media posts, and news articles. By automating the process of data extraction, NLP can save time and improve the accuracy of data analysis.

NLP is also used in industries such as healthcare and finance to extract important information from patient records and financial reports. For example, NLP can be used to extract patient symptoms and diagnoses from medical records, or to extract financial data such as earnings and expenses from annual reports.

Machine Translation

Machine translation using NLP involves training algorithms to automatically translate text from one language to another. This is done using large sets of texts in both the source and target languages.

NLP algorithms use statistical models to identify patterns and similarities between the source and target languages, allowing them to make accurate translations. More recently, deep learning techniques such as neural machine translation have been used to improve the quality of machine translation even further.

Natural Language Generation

Natural Language Generation (NLG) is the process of using NLP to automatically generate natural language text from structured data. NLG is often used to create automated reports, product descriptions, and other types of content.

NLG involves several steps, including data analysis, content planning, and text generation. First, the input data is analyzed and structured, and the key insights and findings are identified. Then, a content plan is created based on the intended audience and purpose of the generated text.

Finally, the text is generated using NLP techniques such as sentence planning and lexical choice. Sentence planning involves determining the structure of the sentence, while lexical choice involves selecting the appropriate words and phrases to convey the intended meaning.

Sentence Segmentation

Sentence segmentation is the process of identifying the boundaries between sentences in a piece of text, and it is a fundamental task in NLP.

Sentence segmentation can be carried out using a variety of techniques, including rule-based methods, statistical methods, and machine learning algorithms.

Rule-based methods use pre-defined rules based on punctuation and other markers to segment sentences. Statistical methods, on the other hand, use probabilistic models to identify sentence boundaries based on the frequency of certain patterns in the text.

Machine learning algorithms use annotated datasets to train models that can automatically identify sentence boundaries. These models learn to recognize patterns and features in the text that signal the end of one sentence and the beginning of another.

Sentiment Analysis

Sentiment analysis (sometimes referred to as opinion mining), is the process of using NLP to identify and extract subjective information from text, such as opinions, attitudes, and emotions.

Sentiment analysis can be carried out using several techniques, including rule-based methods, statistical methods, and machine learning algorithms.

Sentiment analysis has a wide range of applications, such as in product reviews, social media analysis, and market research. It can be used to automatically categorize text as positive, negative, or neutral, or to extract more nuanced emotions such as joy, anger, or sadness. Sentiment analysis can help businesses better understand their customers and improve their products and services accordingly.

Speech Recognition

Speech recognition, also known as automatic speech recognition (ASR), is the process of using NLP to convert spoken language into text.

Speech recognition is widely used in applications, such as in virtual assistants, dictation software, and automated customer service. It can help improve accessibility for individuals with hearing or speech impairments, and can also improve efficiency in industries such as healthcare, finance, and transportation.


No surprises here; summarization is the process of using NLP to generate a shorter version of a longer piece of text while retaining the most important information.Summarization can be carried out using several techniques, including extractive summarization and abstractive summarization.

Summarization is used in applications such as news article summarization, document summarization, and chatbot response generation. It can help improve efficiency and comprehension by presenting information in a condensed and easily digestible format.

Text Processing

Text processing using NLP involves analyzing and manipulating text data to extract valuable insights and information. Text processing uses processes such as tokenization, stemming, and lemmatization to break down text into smaller components, remove unnecessary information, and identify the underlying meaning.

Text processing is a valuable tool for analyzing and understanding large amounts of textual data, and has applications in fields such as marketing, customer service, and healthcare.

How is Natural Language Processing applied?

As mentioned above, NLP has numerous applications. In this section, we will explore some of the most common applications of NLP and how they are being used in various industries.

Natural Language Processing in the Financial Services Industry

In financial services, NLP is being used to automate tasks such as fraud detection, customer service, and even day trading. For example, JPMorgan Chase developed a program called COiN that uses NLP to analyze legal documents and extract important data, reducing the time and cost of manual review. In fact, the bank was able to reclaim 360,000 hours annually by using NLP to handle everyday tasks.

Financial institutions are also using NLP algorithms to analyze customer feedback and social media posts in real-time to identify potential issues before they escalate. This helps to improve customer service and reduce the risk of negative publicity. NLP is also being used in trading, where it is used to analyze news articles and other textual data to identify trends and make better decisions.

Natural Language Processing in the Insurance Industry

Insurance agencies are using NLP to improve their claims processing system by extracting key information from the claim documents to streamline the claims process. NLP is also used to analyze large volumes of data to identify potential risks and fraudulent claims, thereby improving accuracy and reducing losses. Chatbots powered by NLP can provide personalized responses to customer queries, improving customer satisfaction.

This can be seen in action with Allstate’s AI-powered virtual assistant called Allstate Business Insurance Expert (ABIE) that uses NLP to provide personalized assistance to customers and help them find the right coverage.

Natural Language Processing in Government

Government agencies are increasingly using NLP to process and analyze vast amounts of unstructured data. NLP is used to improve citizen services, increase efficiency, and enhance national security. Government agencies use NLP to extract key information from unstructured data sources such as social media, news articles, and customer feedback, to monitor public opinion, and to identify potential security threats.

NLP can also be used to automate routine tasks, such as document processing and email classification, and to provide personalized assistance to citizens through chatbots and virtual assistants. It can also help government agencies comply with Federal regulations by automating the analysis of legal and regulatory documents.

Natural Language Processing in Healthcare

In the healthcare industry, NLP is being used to analyze medical records and patient data to improve patient outcomes and reduce costs. For example, IBM developed a program called Watson for Oncology that uses NLP to analyze medical records and provide personalized treatment recommendations for cancer patients.

As NLP continues to evolve, it’s likely that we will see even more innovative applications in these industries.

Benefits and Risks of Natural Language Processing

NLP offers many benefits for businesses, especially when it comes to improving efficiency and productivity. Here are some of the ways NLP can enhance a company’s performance.

  1. Increased data analysis and processing accuracy: NLP enables the automated processing and analysis of large volumes of data such as text, which can be difficult for humans to analyze effectively. With the use of advanced algorithms, NLP can accurately identify patterns, relationships, and sentiments within the data, resulting in more accurate insights.
  2. Improved efficiency and productivity: By automating many manual tasks such as data entry, data labeling, and data classification, NLP can save significant time and resources. This leads to increased productivity, allowing organizations to focus on more complex tasks.
  3. Improved customer service: NLP can be used to create chatbots and virtual assistants that can respond to customer queries in real-time. This can improve customer service by providing faster response times and personalized interactions.

While NLP has many benefits, there are also potential risks and challenges associated with its use. Here are three to consider when evaluating NLP.

  1. Data bias: Though usually unintentional, NLP models can be biased due to the lack of diversity in training data or the use of biased algorithms. This can lead to inaccurate analysis and decision-making, especially in sensitive areas such as hiring and lending.
  2. Privacy and security concerns: Because NLP is used to process and analyze personal data such as emails, social media posts, and online conversations, it can raise concerns over privacy and security. There is a risk that this data can be leaked or hacked, compromising the privacy of individuals.
  3. Implementation Costs: NLP requires a significant investment in resources, including data, infrastructure, and expertise. The cost of implementing NLP solutions can be high, making it a challenge for smaller organizations.

How does Natural Language Processing fit in with Intelligent Document Processing?

Intelligent Document Processing (IDP) is an advanced form of document processing that uses various technologies such as NLP, OCR (optical character recognition), and machine learning to extract data from unstructured documents and automate document-based workflows.

NLP plays a crucial role in IDP by enabling the understanding of the natural language used in documents, such as contracts, invoices, and emails. By understanding the content in these documents, NLP algorithms can extract specific information from these documents—such as names, dates, and addresses—and use it to automate tasks and workflows.

NLP can also be used to categorize documents based on their content, allowing for easier storage, retrieval, and analysis of information. By combining NLP with other technologies such as OCR and machine learning, IDP can provide more accurate and efficient document processing solutions, improving productivity and reducing errors.

How has Natural Language Processing evolved?

NLP has evolved significantly over the past few decades, driven by advancements in computing power, data availability, and machine learning algorithms. Here are some key milestones in the evolution of NLP:

Rule-based systems: In the early days of NLP, systems were built using hand-coded rules that tried to capture the nuances of human language. However, these systems were limited by the complexity of language and the difficulty of creating rules that covered all possible scenarios.

Statistical models: In the 1990s, statistical models started to gain popularity, with algorithms trained on large datasets of text. These models could automatically learn the patterns and structures of language, allowing for more accurate predictions and better performance on tasks such as text classification and information extraction.

Deep learning: In the last decade, deep learning has revolutionized NLP by enabling the training of large neural networks on massive amounts of data. This has led to breakthroughs in machine translation, sentiment analysis, and language generation.

Pretrained language models: Recently, pretrained language models such as BERT and GPT have become popular, allowing developers to fine-tune these models on their specific tasks and achieve state-of-the-art performance with minimal effort.

NLP has come a long way since its early days and is now a critical component of many applications and services.

What is the Future of Natural Language Processing?

The future of NLP looks promising, with ongoing research in areas such as multilingual processing, explainability, and integration with other AI technologies. Here are some potential future developments in NLP:

  1. Improved language understanding: NLP is expected to continue to evolve to better understand the nuances of human language, including sarcasm, irony, and context.
  2. Increased personalization: NLP can help provide more personalized recommendations, search results, and customer experiences by understanding individual preferences and behaviors.
  3. Integration with emerging technologies: NLP can be combined with emerging technologies like augmented and virtual reality to create even more immersive experiences.
  4. Expanding use cases: As NLP technology becomes more advanced and accessible, it will be used in new and innovative ways in industries like healthcare, education, and entertainment.

Overall, the potential uses and advancements in NLP are vast, and the technology is poised to continue to transform the way we interact with and understand language.

A Promising Path to Innovation and Advancement

If ChatGPT’s boom in popularity can tell us anything, it’s that NLP is a rapidly evolving field, ready to disrupt the traditional ways of doing business. As researchers and developers continue exploring the possibilities of this exciting technology, we can expect to see aggressive developments and innovations in the coming years.

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