Asset Classes and Strategy

As an engine of the digital economy, AI & Innovation received a significant boost as a result of the COVID-19 outbreak. Global lockdowns forced individuals and companies to embrace digitalisation – many businesses believe that AI will transform their organisations within the next three years (Figure C5).

Big Data is fuelling the ability for AI to improve its capabilities. Daily interactions with ‘smart assistants’ such as Alexa, Siri and Google Assistant, for example, create exponential amounts of data, with an estimated 100 million voice-based smart speakers sold worldwide ⁷ , while improvements in computing power support the more sophisticated algorithms.

Governments are fostering initiatives to research, develop and integrate new technologies into their economies to fuel growth. China, Japan, France, Canada, Germany, India, Sweden, the UK and the US all have targeted AI strategies.

In a world of ‘smarter’ cities, autonomous electric vehicles can determine optimal travel routes from AI-enabled traffic monitoring, on top of reducing pollution and the need for car ownership. Buildings can become more energy and water efficient, saving both money and resources.

A possible pitfall is the risk of enhanced regulatory oversight. Excessive or inappropriate policies may slow the adoption of new technologies, specifically, policy controls over how technology companies store and use the data they collect. Digital taxes, on the other hand, may create headwinds for global tech giants or emerging AI players.

Yet the momentum of innovation is strong. In financial services for instance, Bank of America now uses predictive analytics to alert customers up to seven days in advance on whether their spending habits will potentially reduce their account balance to zero. Meanwhile, Citibank integrates AI into its fraud detection processes.

UOB, for its part, uses AI to detect suspicious transactions and connected parties to combat money laundering and financial crime. It also employs AI to analyse transaction data, turn that information into meaningful insights and provide guidance on the most suitable financial solutions for its customers via its mobile banking app UOB Mighty.

Ultimately, new opportunities from Big Data and technology tools application are already apparent via 5G, augmented reality, Internet of Things (IoT) and cloud computing, providing a long-term trend which investors can tap into.