Thursday 10, May 2018 by Tony Long

2018: A banking odyssey

 

Tony Long, CEO of CPI Financial considers the benefits of AI as a force for economic and social good 

In Stanley Kubrick’s seminal space movie 2001: A Space Odyssey, the central character is not one of Hollywood’s star actors, but a computer called Hal (a Hal 9000 to be precise) and whilst many people have debated the true meaning of Kubrick’s representation of Arthur C. Clarke’s book (Kubrick actually co-developed the book with Clarke whilst the film was being made and it was only published after the film was released), the basic tenet was that our lives will be controlled by computers with far superior intelligence to ours in the not too distant future.

2001: A Space Odyssey was released in April 1968 and fifty years on it seems that we are indeed heading rapidly towards the possible realisation of such a vision.

Today we happily interact conversationally with devices in our homes to tell them what we want to buy or need to know, and biometrics are increasingly a part of everyday life; whilst much of the highly skilled manual and intellectual office work that we have historically based our education systems on is being replaced by computerised precision machinery, artificial intelligence (AI) and robotic process automation (RPA).

Many see this kind of progress as some dystopian future where not only will significant numbers of jobs be lost to technology, but also what we can do as individuals will increasingly be regulated by the vast amounts of data that our every move generates.

But there is little doubt that our ability to create and develop such systems is going to bring a wealth of benefits that were unimaginable even just 20 years ago and a new generation of workforce is becoming increasingly normalised to this way of life.

The economic benefits of AI, especially to countries within emerging markets, where the lack of legacy systems and ageing infrastructure means they are able to implement leading edge technologies at speed are considerable. PwC estimates that the benefit to the global economy could be as much as $15.7 trillion—more than the current output of China and India combined ($6.6 trillion from increased productivity and $9.1 trillion from benefits to consumers).

In its recent 2018 report, The potential impact of AI in the Middle East, PwC estimates that the value of AI to the region could be as much as $320 billion by 2030, with the UAE set to benefit most in relative terms at 14 per cent of GDP ($96 billion) and not surprisingly Saudi Arabia the most in absolute terms at $135 billion (12 per cent of GDP). In fact, the UAE and Saudi Arabia are placed third and fourth respectively behind the US (15 per cent) and China (26 per cent) in the global ranking of AI contribution to GDP by 2030, and well ahead of Europe and developed Asia.

Overall, AI is expected to contribute 20 to 34 per cent of annual growth across the region, with the fastest growth coming from UAE (34 per cent) and Saudi Arabia (31 per cent), matching the International Data Corporation’s forecast of 32 per cent annual growth in expenditure on AI and cognitive technologies to $100 million by 2021.

With most of the benefit being felt in the public sector and retail, wholesale and distribution trades (both 19 per cent), the benefit to the financial and professional services industry of $38 billion (14 per cent) is similar to technology and telecoms (15 per cent), transport and logistics (14 per cent) as well as construction and manufacturing (12 per cent).

Banks have had a hard time recently with public perceptions and have shouldered a lot of the blame for the global financial crisis. The opportunity that AI and other fintech offers the banking industry to put its house in order and deliver genuinely beneficial products and services to its customers and their communities is one that can benefit us all, but especially those who need it most in the emerging markets around the world.

This is a golden opportunity to be a part of the solution, and no longer the source of the problem.

  

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