Transcript
Speaker: Welcome to HSBC Global Viewpoint, the podcast series that brings together business leaders and industry experts to explore the latest global insights, trends, and opportunities.
Speaker: Make sure you're subscribed to stay up to date with new episodes.
Speaker: Thanks for listening.
Speaker: And now onto today's show.
Speaker: Welcome to the latest in our DigiTalks podcast series.
Speaker: We are featuring a variety of different topics that are currently trending in the digital world.
Speaker: We will now explore artificial intelligence.
Speaker: I'm joined by two guests today.
Speaker: Mark McDonald, who is the head of data science and analytics at HSBC's Global Research, and Einar Magnussen, who is the head of AI capabilities for HSBC's Markets and Security Services.
Speaker: Mark, Einar, thank you so much for joining us today.
Speaker: Thank you, Gabriella, for having us on the podcast.
Speaker: Thanks, Gabriella.
Speaker: All right.
Speaker: Thanks, everybody.
Speaker: So let's dive right in.
Speaker: Einar, AI is clearly very hot right now, but could you give us a quick overview of what we mean when we talk about AI and how it relates to machine learning?
Speaker: Another term that we're hearing a lot about.
Speaker: Absolutely.
Speaker: Put simply, AI refers to the development of computer systems that can perform tasks that normally require human intelligence.
Speaker: such as visual perception, speech recognition, decision making, and language translation.
Speaker: Machine learning is one subfield of AI that deals with the development of algorithms that can learn from and make predictions or decisions on data without being explicitly programmed.
Speaker: In other words, AI is something of an umbrella term and machine learning is a subset of AI.
Speaker: So Mark, with the popularity of ChatGPT, we're hearing a lot of talk about generative AI right now.
Speaker: What is generative AI and why is it getting so much attention right now?
Speaker: So generative AI is a relatively new type of AI, which is currently taking the world by store.
Speaker: And really, these are machine learning models which can generate new content.
Speaker: And until recently, this act of being creative was something that was thought of as a uniquely human capability.
Speaker: However, turns out that machines are pretty good at this too.
Speaker: As for the degree of attention which these technologies are currently receiving, I'd say it's both justified and overblown, depending on how you look at things.
Speaker: So from a purely technical perspective, the recent improvement in the performance of these models isn't anything like as significant as the recent increase in hype.
Speaker: Instead, it's been a process of slow and steady improvements in their model performance.
Speaker: What's really changed is the proliferation of this technology.
Speaker: A few months ago, the only people who could use this technology were geeks like me and like Ainar.
Speaker: Now anyone who can use a website can get easy access to the most cutting edge technology in the field.
Speaker: And from the perspective of how much this technology will end up having a genuine influence on the world, this is actually a big change.
Speaker: We're now in the situation where any entrepreneur, manager, student in a dorm room, whoever, who has an idea of how to commercialize this technology, they can easily and inexpensively try out their idea.
Speaker: So there are going to be millions of people experimenting with this technology, and some of these experiments will end up being transformational.
Speaker: And from that perspective, the hype is indeed warranted.
Speaker: Wow.
Speaker: Thanks, Mark.
Speaker: So this sounds like an exciting prospect.
Speaker: So what do you think are the likely impacts of this technology on asset prices?
Speaker: Well, there are some sectors on which this technology will have a clear impact.
Speaker: We're already seeing generative AI having an influence on big tech and semiconductor companies.
Speaker: Another clear impact is this technology will dramatically reduce the cost of producing content.
Speaker: It won't notably change the size of the addressable market in terms of the degree to which content can be monetized, so it's likely to result in a shift amongst the winners and losers in this field.
Speaker: And whilst the impacts on these sectors are obvious, there are several other sectors on which generative AI is likely to have a notable impact.
Speaker: So in the primer that we published on this technology earlier in the year, many of the sector analysts from HSBC Global Research delved more deeply into how this technology is likely to influence the stocks in their sector.
Speaker: Some of these sectors are likely to be a surprise to many listeners.
Speaker: I suggest check out the piece for more details.
Speaker: Thanks, Mark.
Speaker: So before we dive into some of those potential opportunities for the use of generative AI, Einar,
Speaker: Could you give us some insights into how AI more broadly is being used across our markets and security services business?
Speaker: So as in many industries, we're feeling the benefit of AI across our business.
Speaker: And of course, we're seeing advances in natural language and image processing, providing significant enhancements to our automations in our back and middle office.
Speaker: But we're also seeing great benefits in our ability to price and manage risk in a more accurate and timely manner.
Speaker: And on top of this, we've been able to arm our frontline staff with pertinent and insightful information, allowing them to focus on building stronger relationships with brokers and clients alike.
Speaker: We're hearing so much about the likes of ChatGPT, and I've mentioned this earlier in one of my questions.
Speaker: Where are we seeing such technologies being used in the industry?
Speaker: Yeah, we're undertaking a lot of experimentation with large language models, which are a key form of generative AI.
Speaker: And we see its use as falling into two kinds of application broadly.
Speaker: So the first involves supercharging our staff with co-pilots that significantly enhance their efficiency.
Speaker: And that could be coding co-pilots that enable our software developers to more quickly generate code for user needs.
Speaker: Could be writing assistance for the many people that spend time creating or summarizing text.
Speaker: or more bespoke co-pilots for frontline staff that provide a language-based interface into key in-house data sources and systems.
Speaker: On top of these co-pilots, we see large language models underpinning the next generation of intelligent automation.
Speaker: enabling systems to research, plan and execute tasks themselves, significantly boosting businesses ability to scale their products and services.
Speaker: So, wow, it sounds like we have an exciting future ahead of us and one that's not all that far away.
Speaker: But Mark, might these particularly game changing technologies not have significant impact on our fundamental view of labor?
Speaker: And second question, what might this mean for the future of work?
Speaker: That's a great question, Gabriela.
Speaker: Generative AI is indeed an exciting development that has many potential use cases.
Speaker: As with any disruptive technology, there are likely to be both upsides and downsides.
Speaker: The upsides, I would say, are clear.
Speaker: This technology has been likened to autocomplete on steroids.
Speaker: So they're going to be significant productivity improvements for many knowledge workers.
Speaker: However, there are also many social governance and ethical issues raised by these generative models.
Speaker: And mitigating these risks is a huge area of research for many machine learning researchers at the moment.
Speaker: And it's important for investors to be aware of these risks too.
Speaker: Having said that, one risk which we think is somewhat overblown is the risk that this technology will lead to widespread job losses.
Speaker: As with previous waves of automation, it's likely that the lost jobs will be replaced by new jobs, many of which never existed before.
Speaker: So in other words, new technologies have historically tended to accelerate the transition of roles in the labor market.
Speaker: So we need to prepare for a future with AI by educating our workforce and developing the skills necessary to work alongside these technologies.
Speaker: And by doing so, we can ensure that AI has a net positive impact on society and serves as a catalyst for growth and innovation.
Speaker: What a great note to end on.
Speaker: So thanks so much, Mark and Einar.
Speaker: That was a great discussion on artificial intelligence, its definition, use and direction of travel.
Speaker: I would like to thank you for listening to this edition in our series of DigiTalks podcasts.
Speaker: We hope that you enjoyed learning more about AI.
Speaker: Stay tuned for more from our podcasts as we explore more trends in the coming weeks.
Speaker: Thank you for joining us at HSBC Global Viewpoint.
Speaker: We hope you enjoyed the discussion.
Speaker: Make sure you're subscribed to stay up to date with new episodes.
