From cryptocurrencies to ChatGPT, digital and tech were headline news in 2022. That’s unlikely to change in the year ahead, although inevitably we will see the hype fade on some innovations to be replaced by the latest shiny new thing.
The one constant that transcends the news cycle is the relentless pace of technological change, and new developments will continue to emerge that have the potential to transform the way we live and work.
Here’s my list of the top trends in technology to watch out for in 2023, with a specific nod to how they may impact the banking sector.
1. ChatGPT, overhyped?
The use of artificial intelligence to generate text, audio and visual content has hit the mainstream with the arrival of ChatGPT. Developed by OpenAI, with Microsoft as a major investor, it’s capacity to synthesise huge amounts of text makes it one of the most trained language models ever created. Yet it still has access to only a small portion of human knowledge (because a lot of knowledge is non-linguistic), and, experts argue, has no human-level understanding of concepts. As a result, ChatGPT sometimes writes reasonable-sounding, but incorrect, answers.
With its ability to drive the cost of producing plausible text to near zero, the danger is that we won’t know what to trust. But used effectively, the underlying technology has the ability to further open up the acceptance of conversational interfaces and lift personal and corporate productivity.
So, is ChatGPT overhyped? The short answer is yes, for now, but generative AI is likely to be transformative. As the fanfare that surrounds ChatGPT begins to die down, this class of AI should find its niche in certain job functions and industries. For banks, generative AI offers many possibilities, from writing software and drafting policies, to using language to interface with applications and data.
2. Metaverse hype to fade
So far, the metaverse has struggled to live up to the hype. While walled metaverses, such as the hugely popular ‘Fortnite’ game, continue to do well, we’ve not seen any material progress on an immersive digital-twin internet-like environment. This year, I expect consumers to recognise the ongoing challenge to overcome the constraints of realism. We’ll continue to see niche areas develop, particularly training scenarios that benefit from full immersion, modelling, and visualisation (for example in defence, aerospace, manufacturing, and healthcare). Immersive technology can also enhance remote collaboration, and for banks that will open up opportunities to remotely connect with their customers.
3. Blockchain takes a hit
The scandals, failures and market collapses that beset the cryptocurrency world in 2022 have dealt a reputational blow to the crypto side of blockchain technology. Despite the hit, there have been small advances in corporate niche blockchain use cases – for example, in decentralised finance for wholesale funding markets, as advanced by banks like JP Morgan, DBS, and Citibank. We will see further developments in blockchain to enhance digital identity, payments, and smart contracts.
This year, regulators will build resiliency by establishing legal frameworks to protect citizens, while central banks will continue to explore the development of their own digital currencies. For banks, blockchain technologies have potential to drive efficiencies in areas like cross-border payments, trade financing, collateral management, settlements, carbon credit, and loyalty.
4. A new space race
Low Earth Orbit (LEO) satellites, while relatively well established, have been touted as the new preferred means of communication transmission in space, and this year we could see smartphones connecting directly to satellites at near 5G speeds. Tech giants Apple, Amazon, and SpaceX, have all been spending big to acquire and launch satellites as a means to improve the speed, security and quality of communications.
As internet coverage in rural and regional improves with the proliferation of LEO satellites, banks will be able to extend their digital services to customers who have previously been more reliant on distant branches, lifting financial inclusion and fairness for all.
5. Computer chip shortage to continue
After the COVID-19 driven global computer chip shortage (from which we still haven’t fully recovered), an ‘east vs. west’ chip war is now well underway. The US and China are battling over semiconductors, that are found in almost every electronic device we use today.
Both countries will continue to invest in their domestic chip-making industries, but these will take years to develop. In the meantime, tensions will continue to impact global supply and demand, especially high-end chips, impacting advances in chip architecture.
6. Rise of the platform
We’ve seen a shift from organisations running projects to building products, to now operating platforms. These platforms are assembled from components that are supported by industry-specific cloud-based capabilities.
We’ll continue to see some of the more advanced and capable companies offer their technology as a platform at an industry level. For example, Goldman Sachs offers a data and analytical platform to other financial institutions, and Westpac has launched a bank-as-a-service (BaaS) platform for third party partners.
7. Ransomware is a draw
The trend of ransomware payments is down as companies have become better at securing their data through protected back-ups. Still, the battle is not yet won and organisations of all sizes will continue to increase investment to prepare for different types of ransomware attacks. It will be a priority to accelerate the migration of applications, data, and services to the cloud. Stronger policies at all levels, from government to companies, will boost cyber technology security and defences.
Banks are at the forefront of ransomware defences, bringing in new prevention, detection, and recovery techniques. Educating the community, customers, and their own workforces on security precautions will continue to be important, along with cross government and industry collaboration.
8. Hybrid work here to stay
With the hybrid workplace model increasingly seen as the ‘new normal’, companies need to apply the lessons learned over the last 3 years. That means better communication, flexibility, and agility to promote a healthy work-life balance. The best companies will use this to differentiate themselves.
The tension between the ‘autonomous’ and ‘office-only’ workers will rise as companies extend hybrid culture to build meaningful and effective new ways of working. Focus will increase on work-from-anywhere hardware and applications; security and cyber protection; connection, communication, and collaboration tools; productivity and workspace analytics; and collaborative space over individual workspaces.
9. Technology for good
The tech sector is waking up to its impact on the environment. It is estimated that data centres consume about 3 per cent of the global electric supply and account for about 2 per cent of total greenhouse gas emissions – that’s equal to the emissions generated by the commercial aviation industry. Cloud computing giants like AWS and Microsoft Azure are aggressively investing in sustainable operations and delivery, aspiring to eventually achieve net zero emissions within the decade, or sooner.
Companies will pay more attention to their sustainable practices, including supporting renewable energy projects and green infrastructure, improving data transparency, addressing biases and access standards, and ensuring their computing landscape is efficient. We’ll see governments and regulators becoming more active in company oversight across a range of ethical technology areas. Banks will, like most companies, need to recognise the changing expectations of the community and put in place measures to meet those standards.
10. Engineering mass migration
As the big tech firms continue to layoff highly skilled technologists, they’ll feed into companies that are searching for tech talent. Over the last 40-plus years, cyclical change has been the norm for the industry, while the layoffs we’re seeing now are largely a correction from the aggressive hiring during the pandemic. This will provide an opportunity for start-ups and companies in other industries, including banking and finance, to snap up technologists that have been in short supply.