A report by IDC has cast a fascinating light on the APAC region and the ongoing development of AI technology. It is easy to forget that while AI is often associated with ChatGPTand similar services, this is just the tip of the iceberg. Finance will be one of the main areas to benefit from the ongoing development of AI technology, along with several others.
AI investment in the APAC region
Between 2021 and 2026, investment in AI in the APAC region is expected to grow at a compound annual growth rate of 24.5%. In 2021, AI investment was just under $20 billion, and it is expected to mushroom to $49.2 billion by 2026.
Those who follow the sector will also be aware of recent comments by leading lights such as Elon Musk and others who have made their fortunes in the world of technology. They believe it is time to take a six-month pause in developing AI technology which is more advanced than ChatGPT. Is this even possible?
Main areas driving AI investment
As mentioned in previous articles, AI is already in everyday use, although not always as visible as it will be going forward. In the short to medium term, there will be significant AI investment in leading sectors such as:-
• Augmentation of customer services
• Smart business innovation/automation
• Recommendation/augmentation of the sales process
• IT optimisation
• Fraud analysis/investigation
The cumulative investment in these leading five sectors is expected to rise from $9.8 billion in 2023 to $18.6 billion in 2026. This leaves more than $30 billion in 2026 alone to be spent on other areas of AI, hence the considerable excitement amongst investors.
Investment services and AI
While the recent controversy surrounding AI is focused on "human competitive intelligence", this will not necessarily impact funding for the investment industry. There is no doubt that AI will enhance an array of services, such as:-
Trend analysis
Looking back over reams and reams of information in a split second means that AI will be central to those seeking to identify historical trends likely to be repeated. There is an argument that this type of technology shortens the timescale during which these trends occur, but that has happened since the year dot. Technology and enhanced efficiency allow traders to react more quickly on the way in and out as trends evolve.
Financial sector
The financial sector, taking in banks and other similar operations, is already using AI technology to identify potential fraud and investigate areas of concern. The expected technology enhancements over the next decade or so will undoubtedly assist the financial sector in identifying and reacting to fraud much more quickly. In turn, this will give customers and investors more confidence in these financial institutions. This is not to suggest that fraud will disappear, but how the financial institutions react will be much swifter, much more profound and indeed more proactive than reactive.
China is leading the way
Part of the IDS report looks at the influence of China on AI and the APAC region. Taking figures for Chinese investment in AI in isolation, investment is set to reach $26.4 billion by 2026 with a short-term compound annual growth rate of 20.6%. Again, it seems to be a case of China leading and the rest of the APAC region following – perhaps influenced by ever-tighter trading relationships across the Far East. How will the Americas and Europe react to this vast APAC funding available to the AI sector?