By Merlin Linehan
In January this year a man walked into a Shanghai metro station and his face was instantly recognised by Dragonfly, a newly developed artificial intelligence (AI) powered facial recognition technology which can take CCTV images and match them to the 1.8 billion photos in its database.
The photo was sent to the nearby police unit who immediately arrested the man as a wanted criminal.
In the following three months 567 other criminals were caught this way in Shanghai.
Dragonfly has also been launched in other major Chinese cities which are all reporting falls in crime and more criminals being caught thanks to this new technology.
Dragonfly is the tip of the iceberg. Artificial Intelligence (AI) based applications will impact on every facet of our lives, think of driverless cars and AI assisted medicine.
Banking will also witness major shifts as AI will be able and take over decisions previously completed by humans, checking credit scores and then taking a judgement on whether to grant a loan or overdraft.
While AI is a concept as old as computers, the most recent and exciting developments are the advances made in the subset of machine and deep learning, this has been driven by ever more powerful processers and fast growing volumes of data made easily available by cloud computing, which in turn has allowed the utilisation of complex overlapping algorithms to process this data and apply it to solving problems.
The ability of AI to learn independently and make autonomous decisions has rapidly increased over the last few years allowing ever more powerful applications of the technology.
Earlier this year Russian President Vladimir Putin remarked in an address to the country’s school children; “Whoever becomes the leader in this sphere (AI) will become the ruler of the world.”
This remark underlined that fact that there is now fierce competition between companies and nations to develop the most advanced AI and enjoy the commercial, societal and military benefits this should bring.
Not to be outdone, in Asia a number of jurisdictions are racing ahead to become the leader in AI.
Who is the boss? Here are the key players:
Singapore – boosting talent and powering research
Singapore has long been a global business hub, topping all the charts for business friendliness and innovation.
Now its farsighted government has recognised that AI will play a vital role in the city state’s future and has launched AI SG – an state wide initiative to invest in AI research and identify applications for AI across healthcare, finance and customer service to benefit the city.
While the government may provide the direction and framework of a tech friendly city, it is the concentration of entrepreneurial talent that can spark the flame of innovation that will create new world beating AI based firms and could make Singapore the focal point of this new sector.
Singapore has been actively encouraging the tech start up scene and is host to Lattice80 a fintech start-up hub which is now increasingly also home to many AI focused firms.
Advanced AI is already alive and working in Singapore, OCBC Bank has been road testing new software which analysed a year’s worth of corporate lending data and improved the accuracy rate of flagging suspicious transactions four fold.
The success of this trial has cleared the way to full implementation in 2018 and with it the birth of a new era in compliance as OCBC and other banks enable computers to take over many of the manual and repetitive tasks currently being carried out by humans.
China – ambitious state plans and trailblazer companies
This summer the Chinese government threw down the gauntlet and published its own policy on AI, which promised nothing less than to dominate the global AI sector by 2030, backed by a promise of over US$ 150 billion in funding over the next decade to make this a reality.
China already has a treasure trove of data in the form of 700 million internet users and has turned its attention to the process of developing a new cadre of AI engineers and researchers through heavy funding of university departments and research facilities.
The Chinese government’s power to marshal the country’s massive resources and ability tap the knowledge of a compliant private sector makes it look certain to dominate the global AI industry.
However throwing money and government backing at a business do not always guarantee success, often it can be the contrary, for example despite strenuous efforts China has failed to develop a world class car manufacturing brand.
China can be a daunting place to do business and other locations like Singapore or Hong Kong are far more attractive places to launch an AI based start-up firm, similarly the world’s top tech talent may not flock to the Chinese mainland when more cosmopolitan locations are on offer.
Nevertheless, some China-based firms are making inroads into AI.
Ant Financial is already a trailblazer in fintech having launched the wildly popular Alipay electronic payment system which boasts over 450 million users across China.
The firm has also been experimenting with advanced AI and are now the technology behind its insurance claims division, customers send in pictures of their damaged cars, the AI analyses the results and is able to draw on and learn from the firm’s vast database of images, learning from previous cases and thus judging and deciding on cases with ever increasing accuracy and efficiency.
Ant Financial is owned by Alibaba who along with Tencent and Baidu are the three major pillars of China’s tech scene and who are all furiously researching AI in search of new business efficiencies and applications.
Japan – tech star slips but charges ahead
Japan was for many years was synonymous with advanced technology, robotics and computing, but now at the dawn of the AI age there is a feeling that the country has fallen behind China and others in this field.
Professor Mitsuru Ishizuka at the University of Tokyo put it bluntly when talking about AI in Japan: “Frankly speaking, the situation in Japan at the moment is very hard and we are slipping behind the research in this area that is being done in China”.
Despite the negativity of some observers Japan could be the ideal testing ground for artificial intelligence applications, its fast aging population, a declining work force and high labour costs makes it the ideal testing ground for AI solutions as replacing human workers will be less controversial and easier for the public to accept.
AI solutions remain costly so it only makes sense to replace humans if there are major savings to be made on salaries and benefits.
Echoing China’s strategy the Japanese government announced that it was going to back major research into AI with Ministry of Economy, Trade and Industry (Meti) given a warchest of around US$ 1 billion to invest in research and development.
However these figures pale in comparison to what is being offered in China. Japan also lacks the tech giants that dominate China which have huge budgets of their own to conduct independent research alongside the government. This doesn’t mean that Japan is doomed to permanently fall behind China, but it must act fast in order to catch up.
Ultimately the future global centres for AI based technology and ventures will be the nations that can provide the winning combination of a business friendly environment, access to large amounts of quality data and perhaps most crucially the ability to attract and retain talented AI oriented engineers and business leaders.
For the banking industry regulation and control over AI will be crucial, because when things go wrong humans will have to remain accountable, for ultimately it is us who program and develop AI in our own (flawed) image.
Merlin Linehan has a background in banking and has written about cross-border international crime and money laundering. He is the founder of Rising Powers, a website covering business and innovation in emerging markets.