Research by PwC estimates that global GDP will be 14 per cent higher in 2030 as a result of artificial intelligence (AI).
That’s the equivalent of an additional $15.7 trillion, or more than the current output of China and India combined.
If this is the case, how exactly will the City’s financial services sector change because of AI? What new kinds of value will be derived from applying AI to traditional processes?
And will AI be the technology that ultimately triggers a fundamental change to the structure of financial markets?
These are just a few of the existential questions that professionals across the financial community are grappling with today, and will be high on the agenda for the UK’s new AI Council.
A recent report by the World Economic Forum (WEF), entitled the New Physics of Financial Services, explores some of these questions.
It’s a much-needed piece of authoritative research at a time when the man versus machine debate still tends to heavily influence the mainstream AI narrative.
However, as the report showcases quite clearly, the sensationalism seems to be waning as the opportunities and limitations of AI are explored more thoroughly.
AI is quickly altering what it means to be a successful institution of the future. The WEF report explains that, as emerging technologies and established capabilities are being combined in unexpected ways, businesses will have to start thinking creatively about implementing AI strategies.
Doing so means redefining the competitive landscape firms operate in, creating new partnership dynamics with different key players, and taking new approaches to technology infrastructure and talent.
As technology ceases to be a limiting factor, the biggest obstacle to the exciting new business models that will drive society forward will be the human creativity to conceive new ways of working.
The report highlights how this is also directly affecting the operating models of financial institutions – making them more specialised, leaner, highly networked, and interdependent on the capabilities of a variety of technology players.
As a result, a new ecosystem is emerging as firms realise that in order to succeed, they’ll need to collaborate with each other and fuse different technologies.
The cloud is a great example that brings this paradigm shift to life.
We see many financial institutions leveraging the cloud to manage big data at scale and experiment with AI, bringing together cloud providers, different datasets, and proprietary and shared AI tools.
We are still in the early stages of experimentation, innovation, and learning.
When the financial industry reaches a maturity of understanding of what can be done from a technology perspective, we will see substantial disruption.
We will also see value creation from businesses that successfully imagine better ways of working.
Although these factors all showcase the dynamic shift happening in financial services, it’s crucial to note that this change in the market won’t happen if AI is seen as a substitute for human talent.
Reading between the lines of this report, I think that what we’re really witnessing is the beginning of a shift from conceiving AI as a simple case of man versus machine to exploring more fully the shifting role of people in a more automated financial marketplace – the role of the machine-augmented human.
If the ultimate goal of this emerging technology is to assist people in doing their jobs better than before, that is something that is far from artificial.