2017 Evidence Meeting 4 – Markets and AI-Enabled Business Models – Overview
Evidence Meeting 4 | Monday, 10 July 2017 | 5:30 – 7:00pm
Committee Room 9, House of Commons
- How does AI impact new markets and business models, and their formation?
- Trade and commerce
- “Peak stuff” versus activity/contact
- Business models
- Wealth creation by AI’s intellectual property
- Transformation survival (balancing business as usual vs. rapid innovation)
- Slides: Evidence Meeting 4 – July 10 – Markets and AI-Enabled Business Models
- Theme Report: Evidence Meeting 4 – July 10 – Markets and AI-Enabled Business Models
- Mike Lynch – Founder, Invoke Capital
- Martin de Heaver – Director, ORBIT
- Husayn Kassai – Co-Founder and CEO, Onfido
- David Kelnar – Investment Director and Head of Research, MMC Ventures
- Abhijit Akerkar – Head of Delivery, Bank of the Future Pilot, Lloyds Banking Group
- Michael Aikenhead – Head of Strategic Artificial Intelligence Advisory, Cognitive Finance Group
Co-Chair Stephen Metcalfe MP welcomed the group of 105 attendees (made up of 6 Parliamentarians and 99 experts from government departments, academia, and business) to the 4th APPG AI Evidence Meeting. He asked the panel and other key stakeholders to present their views on how AI has transformed and will transform the economy, precisely in regards to changing market structures and business models.
Before the evidence giving, Birgitte Andersen took a moment to introduce the Future of Trade Think-Piece (found here) – which was also provided to each audience member in hard copy. The think-piece was created by the Big Innovation Centre for Innovate UK to highlight the move from e-commerce to AI-commerce and, overall, the shift in value generation.
Mike Lynch, tech pioneer who has been working with technology since 1990, and is now the creator of investment fund Invoke Capital, was first to speak. Given his experience in the space – supporting several large AI companies such as Luminance, DarkTrace, and Neurence – he shared that there is a lot of activity/interest in investing in AI companies in the UK. However, Lynch noted that 90% of companies do not possess ‘real’ AI capability, 5% have basic AI capability, and 5% have ‘real’ or advanced capability. This lack of capacity is a challenge that has to be addressed. He ended his remarks acknowledging the considerable effects AI will have across markets as well as in traditional business. At the moment, he argued there is relatively low competition, which means the companies using/applying strategic data first will benefit most due to a high first mover advantage.
Second to present his views was Martin de Heaver, Director of Orbit – an observatory for Responsible Research and Innovation (RRI). Martin noted that a distinct characteristic of the 4th Industrial Revolution is its remarkable speed. For decision-makers to address this issue of speed, they should put pivotal focus on the early stages of research (when an AI application is just an idea). He called stakeholders to apply the AREA (Anticipate, Reflect, Engage, Act) framework (framework overview can be found here). He argued that the RRI model can provide a macro-analysis lens to understand the interdependence of developing technologies and also can help ensure social purpose behind new emerging technologies. In other words, the model can help assure transformations take into account potential social impact from the very beginning.
The third speaker was Husayn Kassai, the co-founder and CEO of Onfido – a company that uses machine learning to help businesses digitally verify people’s identities. Husayn argued that AI has changed markets across industries and, ultimately, helped businesses reduce costs. Onfido, for instance, has helped the finance sector because it makes financial services accessible to all while at the same time maintaining the security of the transaction. He pushed for government to take action regarding two policy areas: (1) the disruption automation will make in the job market and (2) the need to provide financial and non-financial support for start-ups to compete.
David Kelnar, Investment Director and Head of Research at MMC Ventures, took the floor and discussed two projects MMC is working on to understand the AI landscape in the UK better. First, after analysing 300 software start-ups in the UK, they have identified four main trends: (1) AI activity has increased sharply in the recent years. For example, 60% of all start-ups in the analysis were founded in the past 36 months; (2) AI start-ups tend to have a B2B focus; (3) the entrepreneur focus is highly uneven; and (4) UK sectors are at an early stage compared to the US. The full analysis can be found here. The second project refers to an investment framework MMC has built with 17 key factors for start-up success in the sphere. Some of the factors identified include power of data network effect, distance from monoliths, proprietary algorithms, and ability to obtain and retain talent. This framework can also be found online.
Abhijit Akerkar was the fifth speaker, who focused his provocation on five key trends unravelling. First, the big ‘tech giants’ have made huge investments in order to get AI ready for business. In 2016 alone, more than $20 to 30 billion was invested in AI. Second, easy access to AI has provided instant ignition to innovation. Third, adaption of AI is uneven across sectors. Digital leaders are on the frontier of the AI bandwagon. High tech/telecom, automotive, and financial services are considered high in AI adoption. Retail, media, and CPG are medium in AI adoption. Education, health care, and travel are low in AI adoption. Fourth, AI will disrupt business models, specifically through radical personalization, incisive predictability, and efficient production. Fifth, the UK market is the reservoir of potential waiting to be unleashed. According to PwC, UK GDP could be up to 10.3% higher in 2030 – the equivalent of an additional 232 billion pounds.
Lastly, the Head of Advisory at Cognitive Finance Group, Michael Aikenhead, provided his oral evidence on AI’s impact in the financial sector. ‘We are currently in the 2nd wave of AI’, he said, ‘in which we are seeing a lot of transformation in business models across industries’. He noted that innovation is so fast-paced that we cannot possibly predict what the landscape will look like in the next five years. We can speculate, however. Some pressures we see rising involve radical personalization, growing activity by MNCs (Apple entered the financial industry through products such as ApplePay), and open banking or digital banks being created. Banks across the world are responding to these pressures at different speeds, and US banks tend to be the most advanced thus far. He called for the UK to focus on building the right skills in society to successfully compete in this dynamic environment.