Cheaper access, increasing connectivity, and the expanding web of tech-savvy people have led to more and more technologies being created. Because of the potential productivity benefits, companies are working to incorporate more technology into their operations, such as using robots to actively perform more routine tasks in the value chain. From augmented reality to blockchain, there is no industry that will not be fundamentally changed by technological advancements.
This can be illustrated from a McKinsey study estimating that 60% of the tasks associated to all occupations would be automated in the future. Also, a PwC 2016 survey states that 77% of CEOs believe technology would change their sector in the next few years.
The US is the undisputed global leader in tech with a more mature ecosystem, large capital inflows and a favourable access to private capital which enables the rise of disruptive technologies even before listing.
Asia has the highest growth potential thanks to its large potential userbase, a deep level of mobile penetration, and a few pure players in disruptive tech. Besides the private sector, Asian public institutions invest and digitalize.
Thus, the Chinese government is expected to invest heavily in artificial intelligence in the coming years. In an unprecedented move, the Bank of Thailand has been piloting “Project Inthanon”, which looks at using blockchain technology to create a central bank digital currency for interbank settlements. Overall, the digitalization of industries in Asia, especially China, still lags behind that of the United States by a considerable margin, but the gap is narrowing rapidly.
In Europe, there is some maturity, but only in a few established actors (such as Enterprise Software) and despite growing digitalization, it is often overlooked in favour of the US or China.
One of the main drivers of this exponential curve is how companies collect and use data. This might not be a new concept, considering the hype of big data in recent times. However, what is unprecedented is the sheer volume of data that will be available in the future – approximately 163 zettabytes by 2025. Also, 90% of all digital data in existence in the world today was created in just the past two years.
Coupled with the wide range of potential uses of such data for industrial (analytics and simulations) and consumer (Internet of things) purposes through machine learning, the economic impact of this megatrend will be immense. On the flipside, this interconnectedness will increase the likelihood and amplify the effects of any successful cyberattack on the digital infrastructure. However, this may lead to a proliferation of cyber-security firms tailored to the new technologies.
It is estimated that through technological advancements, global GDP will increase by US$15 trillion by 2030. The main bulk of this will originate from productivity benefits from process automation, increased consumer demand for new technologies, and investments in technology firms.
Julien Collin is the head of Markets, Investment & Structuring at Indosuez Wealth Management.