Digitization has been talked about for years. It is hard to count how many industries talk about it, how many consulting projects plan it, and how many new services and processes have been created based on it. Of course, a lot of data is now digital, there are lots of online services, and IT is somehow involved in most processes. But is this enough to count as real digitization? Or is it actually more the case that most companies just add digital data and computers to very old processes instead of planning their operations and customer experiences based on digital models?
It is typical to hear stories how a customer-facing employee cannot do what the customer wants because “our IT system works like this.” Management and process consultants are selling expensive consulting packages to create new processes and educate employees to follow them, but many employees have doubts about whether this really helps their business. Many employees feel it is hard to find internal company information and use internal systems. At the very least, it takes a long time for any new process to see real use.
Does it really have to be so difficult? Of course, we can say it always takes time to get employees to unlearn old things and pick up new things. At the same time, these employees are also everyday consumers who learn quickly to use new things like social media, chat apps, online shopping and streaming video services (and combinations therein). Why is it that these same people are often frustrated with their employer’s IT systems and services – sometimes to the point of using commercial services they understand as a workaround to their company’s internal processes?
Designed for digital
We can see that many successful digital services offered by companies such as Amazon, Facebook, Google, Netflix and Tencent are designed for the digital era. They have successfully leveraged the internet in ways no one could have imagined when the internet emerged as a commercial entity in the mid-1990s, and have out digital technology at the core of their business models.
Many other companies – including media companies, telco carriers, and retailers – have tried to adapt to this new environment. Some of them have died, some of them have survived, but none of them have really been able to replicate the success or even the business models of the digital giants. Which begs the question: is it simply impossible to modify an old company to make it compatible with digital reality?
Most startups are built on digital technology today. Many incumbent companies have tried to learn from them and even acquire them. Very often the outcome is that startup activities are isolated to a corporate VC or innovation unit. IT is still often seen as something that lives its own life inside the IT unit. New models or digitalization don’t exist at the core of these companies – they are just wingman functions.
We have seen this in the media, telco, advertising and retail businesses for some time. Now we are seeing it in the finance and banking business. We cannot blame these companies too much, because it hard to get to real digitalization to work in practice. Sometimes, digitalization requires you to shred your entire legacy IT, destroy all old processes, and demolish your organization. It sounds like you’re being asked to drag your company through chaos with no guarantee of success or even survival. At the same time, if you don’t do it, you are probably doomed and will disappear from the market sooner or later.
Customer experience is the heart of digitization
We have seen a lot of hype about startups and digitization. Corporate people show up at startup events in ripped jeans, they acquire fancy new services, and management consultants charge huge fees during the transition process. But isn’t there a way to skip all that and just start to build businesses and services on new digital technology? Certainly this may still require consultants and external help, but the result would be the ability to really operate in a new way, rather than simply buying time to stay in your comfort zone.
One key thing about new businesses built digital from the ground up is that the whole design process is based on customer experience – as it must be. Whatever mandatory internal or regulatory processes are in place, in the end it all exists solely to offer value to the customer. This sounds like a simple guideline. But it’s actually far more complex. In fact, it takes a lot of courage and concentration to work like this. And it’s especially difficult for existing big organizations encumbered with legacy IT, organizations and processes, internal politics and a lot of people in their own comfort zones who would very much like to stay there.
Now that the hype phase of startups and digitization looks like it will be winding down soon, it’s now time to think in a more mature way about how to do new things. There’s nothing wrong with startup and digitization models, but we have seen many failings and gaps when they are adapted directly in corporations. We particularly need bold leaders in corporations that are ready to shred old things, cannibalize old businesses and build totally new models. New, truly digital processes might actually be easier to implement than these ineffective intermediate models if they are based on customer experience and made as easy for employees to use as Google, Amazon and Facebook without having to call in expensive consultants.
The article first appeared on Disruptive.Asia.
Since Web 2.0 became important, many companies have wanted and claimed to create Web 3.0. The label has mainly been artificial. For example, the semantic web has been a candidate for this role, but we haven’t really seen it or what it might mean in practice. Now we again have a strong candidate for this role: a blockchain-based distributed web.
Web 2.0 means especially more interactive web services, user generated content and social media. It changed internet services significantly from the broadcast model to real interaction between people. Those interactive social media type services now make up a significant part of web services usage time. We can really say Web 2.0 was a change and it was easy to notice this change, although Web 2.0 hasn’t really had an official specification.
The problem with Web 3.0 has been that many companies and people have tried to use it for marketing purposes. It is nice to include it into a business plan covering how to disrupt internet services and pave the way into a new phase. Despite its wide use in marketing, users and service providers haven’t been able to see these changes.
The Web 3.0 label has been put on Semantic Web where computers can understand content, always-on mobile internet, or virtual world web services. The World Wide Web Consortium, W3C, has even created a Semantic Web standard. But it is probably based more on technological dreams than what the users really see and can use today.
Together with blockchain we now see more services and, at least plans, to offer more distributed services. Cryptocurrencies are, of course, an example of these. They are based on models that don’t require a centralized organization or technology to manage and authorize transactions.
Now we see more evidence that these models are not only for cryptocurrencies. Smart contracts are bringing distributed models for many kinds of transactions from buying real estate to managing digital rights for movies and songs. These services are not only going to change web services, but also the role of central ‘authorities’ like notaries, banks and rights owners. We can even see they might challenge governmental services and the role of governments.
At the same time, we see development towards more distributed data on two levels, physically and logically. Physically distributed data means, for example, a local device with AI functionality keeping data locally for several reasons like availability, latency and privacy (read more on MWC2018 on distributed models). An example is self-driving cars that must be independent enough. The logically distributed data means that, for example, users can own their own data, although it is physically in centralized clouds.
This year privacy issues and the rise of blockchain have made distributed data models more relevant. We don’t necessarily need a centralized social media that keeps our data, we can have a service that only shows the data we wish to share to our friends, but we keep it on our own servers (that can be on our account in a cloud). We don’t need a bank or hospital to retain our data, if we can keep our own verified data and use it in services when needed, granting and revoking access on a need-to-know basis.
Timing is always the difficult part to predict. We can be quite sure; the distributed Web is coming. But it is hard to give an exact timetable for it. A breakthrough always requires that several things click at the same time, like availability of technology, the price of technology and user experience. The final breakthrough then might need some lucky coincidences, like one very successful service. After that changes can happen truly rapidly.
It is more difficult to say if the distributed web is the Web 3.0. And does it really matter? Logically, Web 3.0 should be any big change in the internet services that comes next and really changes the user experience, business models and dominating internet services. In that way, the distributed web is the most promising candidate at the moment for that role.
The articles was first published on Telecom Asia.
Digitization is coming to all services, also linked to physical services. It will change the user experience significantly. It helps us to get rid of many complex and time-consuming processes. Especially the combination of blockchain and IoT offers new powerful tools for this.
Let’s take examples that have been introduced to me most recently.
When you buy a house in the future, you can sign the agreement with a smart contract. This signing then triggers an automated process. The payments and loan agreements are accomplished. You are sent digital keys (e.g. to your mobile) to get into the house. The sale starts a process of finding suitable insurance with data that comes directly from your house, and you can select the best one, with the same process for utility contracts.
You can get a car for your use based on your needs. It can be for a single drive or longer-term. All agreements, payments and insurance needs can be handled digitally immediately. There can be different pricing models based on your needs. This works also for self-driving cars and you can even send the car to collect something and it can handle a signing and payment when it completes the delivery.
You can manage and “carry” your own finance and health care data with you. You can control how and when it is used, and you can track its users and their access. When you need health care or a loan, you can get offer offers based on your own data. The same for insurance contracts.
Probably these examples are even simplified, as we cannot even imagine all models to use these two things together in the future. They regardless give an idea about the opportunities to build new services. It will change significantly, how services are offered in the future.
This will especially change the user experience. For example, all processes above now include a lot of paper work, take a lot of time, and the data is not properly utilized (for example, you easily pay extra for home or car insurance, when it is hard to find the optimal one). We can compare the scope for change to how it was to book a trip before internet travel services. You had to find information from brochures, booklets, and travel agencies, fetch tickets and hotel vouchers and have everything on paper with you. But this change can actually be bigger, when it gets many services to work together and is also linked to physical services and devices.
Technology for these services start to be available now or very soon. A more complex question is, who will implement the actual end-user services, how the business models will look, and if the development is more a disruption or an evolution. Telecoms carriers, finance institutions, cloud companies are all linked to these services with other parties like real estate, car, and logistics companies. But are any of them able to offer smooth end-user services, or do they only implement lower level parts in the value-chain?
Technology enables new things, but it needs business models and good customer experience to really change the world. TCP/IP existed since 1960s, but only in the 1990s did we started to get user friendly services and businesses to utilize it. Nowadays, development is faster. It also often so that incumbent players have been able to maintain certain roles, when the Internet has changed a business, but newcomers have really took the major part of a new business. You can think, for example, advertising and media businesses, where many old media and ad companies still exist, but companies like Google, Amazon, Facebook, and Netflix have been the biggest winners and prevail with their new models.
We are going to see a race for these new services. We can already see that carriers, banks and insurance companies are becoming more active to utilize new technology. But to really offer these new services we need much more than a conservative technology development. It requires risk taking with new business models that can also cannibalize existing business lines. Therefore it is not easy for large incumbent companies.
These new services are based on distributed models and data, open APIs and smooth cooperation of many components. It doesn’t even make sense to try to dominate these services alone. For each company, it is much more important to choose and accept their position and focus on playing that position as well as possible. If someone tries to make it alone, they can lose a lot of money and be out of the actual dominating ecosystem. So, each party should select its own strategy and then start to constructively cooperate to have a valuable role in the ecosystem and value chains.
The article first appeared at Telecom Asia.
Telecom carriers have looked for a role beyond the bit-pipe for years. Now it looks like the evolving TV and content business is a new game that they want to participate in. Netflix and Amazon are leading the streaming business globally and have stepped to produce their own content too. Now there are signs that some carriers want to enter this business. But consequences can be complex to evaluate.
In the US AT&T has tried to merge with Time Warner, but the merger is now a legal battlefield. There are also other similar activities around the world. Maybe the latest one is that Sweden's Telia is talking to acquire Bonnier Broadcasting that owns TV channels and production in Nordic countries. Vodafone just acquired cable networks in Central and Eastern Europe from Liberty Global. Some operators are also in the pay-TV business and even started to produce their own content.
The timing is interesting for both parties. Carriers are still looking for value-added services. At the same time broadcast media companies have really started to feel the impact of Netflix and Amazon and other content from the internet. They lose viewers, and advertising money follows.
For a longer time it has looked like streaming content is one interesting business opportunity for carriers. People are now ready to pay for good content. An additional opportunity is to bundle data and content, such as by offering ‘free data connections’ for a carrier’s own content services. It is a way to tie in customers.
In principle, this sounds good. But as the AT&T and Time Warner case also demonstrated, this kind of vertical mergers can be complex for competition and consumers. We have several questions, like:
How well carriers are able to run this business in practice is its own question. Carriers’ track records in expanding to other businesses is not very promising, and often they ramped down or divested non-core activities. Carriers must at least accept that the media business is very different business from the network infrastructure business.
Globally it looks like there will be strong global content companies, like Netflix and Amazon. At the moment, it looks like the vertical mergers are not really a threat to them, they are strong enough. The media and carriers' mergers can be a bigger threat locally and, for example, in certain language areas. At the same time, someone can argue that Netflix and Amazon could become globally dominant players, and it is actually good to get serious competition from Media-Carrier firms.
Disney’s acquisition of 21st Century Fox is another example of media consolidation. The competition authorities have commented that horizontal deals are not such a threat as the vertical ones for the competition. But it also indicates that media and content firms are preparing for a new era of competition.
There is an old saying that the TV content and distribution business is an example of how one strategy can work only for some time. The past has shown that if a winning strategy seems to be to own cables to customers, then a distributor gets the rights to such a content that every one wants and they start to dominate the value chain, until the best content producers start to dominate it by dictating the terms of the market. So, it is a never-ending pendulum in the value chain. But if you own the whole value chain, which can be the result of vertical mergers, it will be very different game, or no game at all.
The article was first published on Telecom Asia.
Legacy technology is often debated. Recently, we’ve seen many high-profile privacy intrusions (Cambridge Analytica with Facebook) and system malfunctions (mass flight cancellations in Europe in March 2018), yet we are amassing even more data into increasingly large black boxes (how much data did Equifax have again?). Decentralized and distributed systems have started becoming topical and popular. When will the unbreakable black box finally clear for new systems?
Like any large-scale shift, it’s far easier to see the direction than it is to predict anything close to an accurate timing of said shift. Legacy, monolithic, colossal systems are clearly not the future, and more cracks in the foundations are going to be made public in the months and years to come. However frail these systems may be, getting a large-scale shift of any system requires not only years of R&D, it also requires years of validation. But it is happening.
Short of directly overhauling information systems, we can see organizations launching their greenfield projects based on modern technologies, often a step removed from their core infrastructure. For instance, look at what Goldman Sachs did with Marcus, which their technology team has been quite open about. They then rolled out the Marcus platform into GS Bank, but only after taking it to market as a relative standalone. This makes sense – why hold a novel new approach down with archaic systems at the start when the value is minimal, when you can simply link it back in the future? Should it actually be seen as valuable?
Yet, the more new greenfield projects an organization has and launches, the more crucial the question of interconnectedness and interoperability becomes. Tying together these new projects, product, and services, we see a new infrastructure emerge. Riding on the API economy principles, this type of connectivity can and should be native and allow a modular architecture, which, by the way, ends up being future proof given the malleability and high specialization (switch out one call for another and you can swap out an entire product).
Although modularity and longer-term future-proofing are not only limited to technology, it really becomes a question of delivering the best service to the end client. Collaboration between different parties to achieve certain aims, such as syndicating a larger loan to diversify risk exposure, ultimately yields the client what they are looking for and creates more value.
This isn’t without its challenges in a culture which seeks control over client relationships, yet the shift in thinking has to become more purely client-centric. In the case of the syndicated loan, if our bank, in collaboration with various lenders, can provide the client with further value, does that not reflect well on our relationship with the client? Does the client actually care that others are part of the syndicate and if so, does that lessen the perceived value? I would argue that not only is it a more technical nature of the loan for the client, it may even enforce the value created.
Yet creating this new infrastructure allows for an interesting question on timing. At what point is the new infrastructure proven enough that the legacy system can be wound down? Surely, it’s under 50% of usage, but is it 15% or 25%? How long is too long to wait?
Winding down a successful system is also a political question: why fix it when it is not broken? But history shows us that this thinking and the failure to anticipate change bodes dramatically poorly for organizations that exist in innovative or disrupted industries. The financial services industry is clearly in flux.
Crises present themselves as great opportunities, or forced opportunities, and with the future looking full of crises, we are presented with an ever-growing list of opportunities for financial services organizations to leverage. There is, of course, the option that old service lines and offerings simply die out as unused or unpopular following a mass exodus of users, and maybe that is relevant in a few cases, but larger scale change does have to be managed.
With financial services systems, having users in the millions and capital in the billions (and more) taking down a system in any manner includes a major disruption. However, that may be unavoidable, so a proactive path may allow you the chance to determine when that disruption takes place. In private meetings, I’ve even been told of systems that are expected to “go down in 2018 – we just don’t know when!” This seems to be an interesting predicament to try to manage. But even a proactive strategy is not without its issues, imagine telling the board that you intend to take down a multi-billion-dollar business for “maybe a few hours,” how will that go?
We have to conclude that change in an interconnected legacy systems market is messy, and organic change, even more so.
While we wait for these organizations change agents to act when presented the opportunity, we can also be curious about the new silos we are building. We are constantly amassing private and sensitive data behind a central agent’s control all around the world. And the data sets we can today create and generate are truly amazing in their technical nature and terrifying in their implications – with personal identification data, meta-data, smart connected devices in our pockets and homes, the list goes on. To think that central agents and their systems are immune to failure and or attack is naive and time alone will show their integrity.
With all the data we have and our seeming determination to store it into centralized systems, it does make one wonder how well all our change agents are lined up. It also has one hoping they have a proactive plan in motion.
This post originally appeared on MEDICI.
Zurich, June 28, 2018 – Grow VC Group, a leading global FinTech holding company, moves its European office from London to Zurich on July 1. The holding company focuses on managing ownerships and coordinating group activities and this move has no impact on operative companies or their businesses. The Group’s head office is located in Hong Kong and the North America office in New York. The majority of operative companies are headquartered in the US.
German, French and Italian version of this text available:
Die Grow VC Group verlegt ihre europäische Niederlassung von London nach Zürich
Grow VC Group va transférer son siège européen de Londres à Zurich
Grow VC Group trasferisce la sua sede europea da Londra a Zurigo
FinTech business is growing rapidly in the whole of Europe. Switzerland has a good central location in Europe, excellent global connections and strong reputation and business in finance. Jouko Ahvenainen, Grow VC Group Chairman, comments the move “we see Switzerland as an excellent location for finance business in Europe, especially when our companies have more business also in German speaking countries, France, Spain and Italy. We have also seen Switzerland develop to adapt new innovative finance models, including blockchain and crypto finance.”
Ahvenainen continues “Brexit has an impact on the decision. We prefer places that are open for international business, able to offer a stable international environment and have well educated technology talent pools. FinTech is more and more based on advanced technology and data which can be challenge for London, where competence is deeper in finance instruments than disrupting the industry with technology. Brexit has more practical influence on our operative companies than the holding company.”
Grow VC Group’s operative companies are also conducting their own evaluations about best locations in Europe and will announce more about their office locations later in this year. The Group sees growth around Europe at the moment, when also more traditional finance institutions have started transitions to new technologies and services. Outside Europe the Group sees growth especially in emerging markets, where many people have been outside financial services and now they transition directly to use new services. The Group’s companies have made new significant contracts, for example, in Vietnam and Indonesia most recently.
Jouko Ahvenainen, Co-Founder & Chairman
Zurigo, 28 giugno 2018 - Grow VC Group, una holding leader globale in FinTech, trasferisce il suo ufficio europeo da Londra a Zurigo il 1 ° luglio. Il focus del gruppo e’ sulla gestione della proprietà e sul coordinamento delle attività di gruppo e questa mossa non avrà alcun impatto operativo sulle società che ne fanno parte e le loro attività. Le sedi principali del gruppo sono situate a Hong Kong e a New York in Nord America. La maggior parte delle società operative ha sede negli Stati Uniti.
Il business del FinTech sta crescendo rapidamente in tutta Europa. La Svizzera ha una posizione centrale in Europa, ottimi collegamenti globali e una solida reputazione e affari nel mondo finanziario. Jouko Ahvenainen, presidente di Grow VC Group, commenta la mossa con "riteniamo che la Svizzera sia un luogo eccellente per gli affari finanziari europei, specialmente perché le nostre aziende stanno incrementando i loro business anche in paesi di lingua tedesca, Francia, Spagna e Italia. Abbiamo anche visto la Svizzera spingere per l’adozione di nuovi modelli di finanza innovativi, tra cui blockchain e cripto-finanza".
Ahvenainen continua "La Brexit ha un impatto sulla decisione. Preferiamo un contesto che sia aperto alle imprese internazionali, in grado di offrire un ambiente internazionale stabile e avere accesso a talenti tecnologici ben istruiti. Il business del FinTech è sempre più basato su tecnologia e dati che possono rappresentare una sfida per Londra, data la più profonda competenza negli strumenti finanziari che non nel settore tecnologico. La Brexit avrà un'influenza più diretta sulle nostre società operative che sulla holding ".
Le società operative di Grow VC Group stanno inoltre conducendo le proprie valutazioni sulle migliori sedi in Europa e annunceranno di più a riguardo delle loro scelte durante l’anno. Il Gruppo vede una forte crescita del mercato Europeo al momento, posizione supportata dal fatto che anche le istituzioni finanziarie più tradizionali hanno iniziato la transizione verso nuove tecnologie e servizi. Al di fuori dell'Europa il Gruppo vede una crescita soprattutto nei mercati emergenti, dove la maggior parte della popolazione si trova fuori dai servizi finanziari e ora passano direttamente all'utilizzo di nuovi servizi. Le società del Gruppo hanno stipulato nuovi contratti significativi, ad esempio, in Vietnam e in Indonesia più di recente.
Jouko Ahvenainen, Co-fondatore e Presidente
Zürich, 28. Juni 2018– Grow VC-Gruppe, eine führende globale FinTech-Holdinggesellschaft, verlegt am 1. Juli ihre europäische Niederlassung von London nach Zürich. Die Holding konzentriert sich auf die Verwaltung von Eigentümern und die Koordination von Gruppenaktivitäten. Dieser Umzug hat keine Auswirkungen auf operative Unternehmen oder deren Geschäfte. Der Hauptsitz der Gruppe befindet sich in Hongkong und das Nordamerika-Büro in New York. Die Mehrheit der operativen Gesellschaften hat ihren Hauptsitz in den USA.
Das FinTech-Geschäft wächst rasant in ganz Europa. Die Schweiz hat eine gute zentrale Lage in Europa, ausgezeichnete globale Verbindungen und eine starke Reputation und ein gut laufendes Finanzgeschäft. Jouko Ahvenainen, Vorsitzender der Grow VC Group, kommentiert den Schritt: „Wir sehen die Schweiz als exzellenten Standort für das Finanzgeschäft in Europa, vor allem wenn unsere Unternehmen auch in deutschsprachigen Ländern, Frankreich, Spanien und Italien mehr Geschäfte machen. Wir haben auch gesehen, dass sich die Schweiz entwickelt, um sich an neue innovative Finanzierungsmodelle, einschließlich Blockchain- und Krypto-Finanzierungen, anzupassen.“
Ahvenainen fährt fort: „Der Brexit beeinflusst die Entscheidung. Wir bevorzugen Orte, die offen für internationale Geschäfte sind, in der Lage sind, ein stabiles internationales Umfeld zu bieten und gut ausgebildete Technologie-Talentpools zu haben. FinTech basiert mehr und mehr auf fortschrittlichen Technologien und Daten, die für London eine Herausforderung darstellen können, da die Kompetenz in Finanzinstrumenten liegt, die die Branche durch Technologie stört. Brexit hat einen praktischeren Einfluss auf unsere operativen Gesellschaften als die Holding.“
Auch die operativen Gesellschaften der Grow VC Group führen eigene Evaluationen über die besten Standorte in Europa durch und werden später in diesem Jahr mehr über ihre Bürostandorte bekannt geben. Die Gruppe sieht derzeit ein Wachstum in ganz Europa, wo auch traditionellere Finanzinstitute den Übergang zu neuen Technologien und Dienstleistungen begonnen haben. Außerhalb Europas sieht die Gruppe vor allem in den Schwellenländern ein Wachstum, in dem viele Menschen außerhalb der Finanzdienstleistungen tätig sind und jetzt direkt auf neue Dienste umsteigen. Die Unternehmen der Gruppe haben neue bedeutende Verträge abgeschlossen, zuletzt in Vietnam und Indonesien.
Jouko Ahvenainen, Mitbegründer & Vorsitzender
Zurich, le 28 juin 2018 - Grow VC Group, l'un des principaux acteurs mondiaux de la FinTech, va transférer son siège européen de Londres à Zurich à partir du 1er Juillet. La décision n'aura aucun impact sur les entreprises faisant de leurs activités. Le siège du groupe est situé à Hong Kong et à New York, pour le marché nord-américain. La plupart des ses sociétés d'exploitation sont aux États-Unis.
Le marché de la FinTech se développe rapidement dans toute l'Europe. La Suisse a une position centrale et d'excellentes relations mondiales, avec une réputation solide dans le monde financier. Jouko Ahvenainen, président du Grow VC Group, commente cette décision: "Nous pensons que la Suisse est un excellent pôle pour les affaires financières européennes, d'autant plus que nos entreprises augmentent leurs activités dans les pays germanophones, en France, Espagne et Italie. Nous avons également vu la Suisse évoluer vers de nouveaux modèles de financement innovants utilisant la blockchain et la crypto-finance ».
Ahvenainen poursuit: «Le Brexit a influencé notre décision, nous préférons un contexte ouvert aux entreprises internationales, capable d'offrir un environnement international stable et d'avoir accès à des talents technologiques bien formés. Les FinTech s'appuient de plus en plus sur la technologie et les données ce qui peut être un défi pour Londres, puisqu'ils ont une plus grande compétence dans les instruments financiers que dans le secteur de la technologie. Le Brexit aura une influence beaucoup plus directe sur nos sociétés d'exploitation que sur notre groupe ".
Les sociétés d'exploitation du Grow VC Group évaluent également un mouvement similaire mais sur d'autres sites en Europe et il y aura des annonces à ce sujet au cours de l'année 2018. Le groupe connaît actuellement une forte croissance sur le marché européen, une position soutenue par le fait que les institutions financières plus traditionnelles ont commencé la transition vers de nouveaux services et technologies. En dehors de l'Europe, le groupe voit sa croissance principalement dans les marchés émergents, où la majorité de la population est à court de services financiers et adopte directement de nouveaux services et technologies. Par exemple, les sociétés du groupe ont récemment signé de nouveaux contrats pour de grands projets au Vietnam et en Indonésie.
Jouko Ahvenainen, co-fondateur et président
Recently I was watching a discussion about the ethical questions of AI – in other words, how to guarantee AI is more good than bad to human beings and societies. Nowadays many discussions are easily polarized, and this seems to be the case for AI ethics too. There are strong opinions that either people can always use machines (including AI) for their own good, or AI machines will be apocalyptic beasts. Now is the time to evaluate this more deeply.
Some people defend AI, saying it’s not a threat because it’s all basically software code programmed by humans who can also create rules for behavior in each situation. They can decide and control what kind of ethical decisions machines make, and create iron rules that cannot be broken. These people also often argue that what and what kind of machines will be allowed is a political decision.
The other side of that coin is that humans are exactly the problem – or at least those humans who will create machines to amplify their own power and position in business and society. Slave machines will do the work of people, sex robots will replace human partners, and fighter robots will populate armies. Basically, the logic is that bad people with bad intentions can – and will – do bad things with AI and machines to gain power in the world.
The reality is much more complex. Here are five questions that explore a few aspects of this debate:
1. Can political processes control what kind of machines and ethics rules are implemented?
It is hard to believe that any political decision can really stop development of AI. History gives us lots of examples – if something is technically possible, someone will implement it sooner or later. There are many motivations to do so – making money, improving business, gaining power or just intellectual curiosity. New solutions and machines will be used for business purposes. Even if governments decide to ban them for private use, they would still be developed for military purposes. Or perhaps criminals and terrorists would develop them for their own purposes. This is not to say that politicians, governments and societies can’t develop rules and laws for machines – the point is that bans and overly-restrictive rules never work.
2. Is AI technology only bad, or is it just another step of the natural development of human society that has seen our lives improve in many ways?
There have always been people who see development or progress as a threat. Of course, AI machines raise many complex questions, not only in terms of how the machines behave, but also the purposes for which they are developed. They can replace workers and change the distribution of wealth, and these changes can create crises for many individuals. At the same time, we have seen these kinds of changes many times before throughout history, such as the shifts from agricultural societies to industrial societies and then services societies. At the same time, however, all parties must take these issues seriously and work to find solutions for them. This means, for example, finding solutions for wealth distribution (perhaps in the form of new tax and basic income systems), human rights and how each human being can maintain her or his dignity.
3. Can we program ethical rules for machines so that everything works based on our rules?
It is still unknown if machines will ever develop consciousness. At the very least we can say that if they do, it will be different from human consciousness. In any case, some machines are already becoming so complex that we cannot create simple rules for them to govern how they think and behave. Machines process so much data and learn from it that it’s not possible for us to predict their behavior in each situation, especially when machines are linked to each other and learn from each other too. There is currently work being done to create a kind of ‘moral machine’ inside AI. This can include top-down type categoric rules (e.g. “never do this”) and bottom-up learning from different real-world situations. Nowadays it is thought that these moral machines should be based on a hybrid model of rules and learning. But there are still many complex problems to be solved to get this to work.
4. Do we even know – and can humans agree on – which ethical rules to implement?
This is one important question that is often ignored in AI and machine ethics discussions. Not all people are ethical – or, put another way, many people have very different ideas of what constitutes ethical behavior. Even from the philosophical point of view, there are very different approaches – e.g. rule-based deontological models or result-oriented utilitarian models. Then there are even more questions, such as how to interpret models in practical situations. When we need to teach ethics and behavior rules for machines, we must first define common principles. But even if we do that, there will be people who will teach different models to machines – for better or worse – just as people do to each other.
5. Who should take the lead in discussion and decision making on AI ethics?
The simple answer is that everyone must participate and have the right to participate in this process. But the reality is more complex. At the very least there will be a combination of technology, business and political processes. Now, even academic discussion is difficult because it requires competence from many areas, such as moral philosophy, data science and economics – not many people fully understand even one of those areas, let alone all three. An important starting point is to increase awareness and encourage open discussion and systematic thinking around these matters. But how many politicians – for example – have seriously started to think and talk about this?
As we can see, we have many open and unanswered questions even as AI development is underway – and the truly important questions focus on the interaction between AI machines and human beings and the impact on the latter, not just about machines and their behavior. At the discussion I mentioned at the beginning of this article, someone made an interesting point: human beings and machines will probably become more similar over time, but not only because machines will become more like humans – it will also be vice versa. As machines become central in more important roles, people will start to behave more like machines.
The article was first published on Disruptive.Asia.
Photo: Wikimedia Commons (Artificial.intelligence.jpg)
Est. 2009 Grow VC Group is the global leader of fintech innovations, digital and distributed finance services. Our mission is to make the finance services more effective, transparent and democratic. The Group includes leading fintech companies in their own areas.
Research Report 1/2018: Distributed Technologies - Changing Finance and the Internet
Research Report 1/2017: Machines, Asia And Fintech:
Rise of Globalization and
Protectionism as a
Fintech Hybrid Finance Whitepaper
Fintech And Digital Finance Insight & Vision Whitepaper
Learn More About Our Companies: