Covid-19 has supercharged digital innovation as banks, financial services and many other sectors adopt workarounds that are pushing them more rapidly into a virtual future.
The novel coronavirus has upended global travel, put governments on a quasi-wartime footing, forced economies and businesses into lockdown and caused global supply chains to screech to a halt. The crisis has impacted a vast range of areas: work, health, finance, education and more. It has also unleashed a wave of technological innovation. With the surge in infections rendering business as usual impossible, transformations that otherwise would have taken years are occurring in just a few months.
“There is a new saying in Silicon Valley: ‘Slingshot to 2023,’” says Kay Firth-Butterfield, head of artificial intelligence (AI) and machine learning at the World Economic Forum. “Many think we’ve seen in the last two months the equivalent of two years of innovation.”
Amsterdam-based market research firm TrendWatching counted more than 800 innovations worldwide in the first months of the pandemic, spanning everything from chatbots that alert customers, to online shopping opportunities, to virtual beach resorts for the quarantined to the unnerving robot dogs that enforce social distancing in Singapore parks.
Indeed, social distancing makes a future where robots do pretty much everything—flip burgers, disinfect hotel rooms, deliver medicines, disburse small business loans or order supplies—seem much closer.
“Covid-19 has accelerated the widely predicted fourth industrial revolution driven by AI and the Internet of Things (IoT),” says Ian Bradbury, CTO of Financial Services at Japanese technology firm Fujitsu.
Shaken and Stirred
Workplace conventions and strategic plans are being completely reconsidered. “Sudden disruption, especially when it is catastrophic, often acts as a catalyst,” says Amy Webb, founder of the Future Today Institute and professor of strategic foresight at the NYU Stern School of Business. “Managers are more likely to endorse seemingly risky ideas if they lead to short-term survivability.” That may explain why, suddenly, innovations that seemed blue sky thinking are now being greenlit by governments and businesses willing to try anything.
In the face of major supply chain disruptions, for example, the use of drones for last-mile logistics, which had been talked about for some time, suddenly became a hot ticket. In April, the UK government earmarked £8 million (about $10.1 million) to fast-track trials using drones to deliver medical supplies to hospitals. Canada-based Draganfly is developing drones that use sensors to identify an individual in a crowd that displays sympyoms of illness-a cough, sneeze, or elevated temperature.
Last year, McDonald’s started using robotic fryers, Firth-Butterfield points out. This year, CaliBurger is using AI robots to cook. “As we want to put safety above human touch will we see more of these types of systems in force?” she wonders.
The wave of innovation most certainly extends to banking and financial services, where the virus has given a rocket boost to tech adoption. A Gartner survey of 161 finance executives in early May found that 24% anticipate spending more in future on robotic process automation, 20% on cloud-based enterprise resource planning technologies and 19% on advanced analytics.
“Companies are now operating in remote environments, with less staff to run key processes and under immense cost pressure,” says Alexander Bant, vice president, research, for Gartner’s finance practice. “This has resulted in companies moving more quickly to the cloud, applying more robotics to their processes and exposing the need for advanced analytic technologies to plan effectively.”
Jason Maude, chief technology advocate at the UK digital-only bank Starling, contends that in the future, brick-and-mortar banks will fully digitize customer onboarding. “At the moment, the final checks are done in a branch, which has created a barrier for people who are self-isolating or find that their branch is closed,” Maude says.
Covid-19 could tip us even closer to a cashless society. Link, the UK’s largest ATM operator, reported at the end of April that cash withdrawals had more than halved compared to the prior year—although its May report saw cash usage rising again. Broader market trends such as shop closures, the increasing use of contactless payments and ramped-up online spending, have only added to the pressure on cash.
The Virtual Workplace
The most fertile ground for innovation, says Rita Gunther McGrath, professor of management at Columbia Business School, is when people are physically together. No matter how sophisticated teleworking applications become, it will be tricky to replicate the cross-fertilization of ideas that takes place in casual conversations around the office. “For a whole chunk of the population, going digital is completely new, but it’s not like that is going to substitute for what is done live,” Gunther McGrath says.
Yet the past few months of virtual office work has been revolutionary in changing attitudes. Twitter and other tech firms have announced that most employees can work from home. Germany is set to enact a law giving all workers the right to do so. “The mental barriers have been broken,” says Cathy Mulligan, regional CTO of North and West Europe at Fujitsu. “Until now, employers thought you needed a supervisor watching everybody. But now they realize employees can be trusted to work effectively from home.”
Even with restrictions loosening, however, workers aren’t keen to risk infection. “Companies will have to recognize that people may be frightened to return to work,” says Gunther McGrath. And for a huge chunk of the global workforce—factory workers or human caregivers, for example—remote work is not even an option.
System resilience will be even more important in a society operating more remotely. “Computers can also catch viruses,” notes Bradbury of Fujitsu. “What happens if communication networks disappear? If you lose access to the workforce, how do you get them back online?”
Yet technology adoption is often self-reinforcing. More than 1,000 Covid-related chatbots have been created, according to Firth-Butterfield, and that will strengthen machine learning. “What was rough and ready will be much better in a few months,” she explains. That will improve acceptance. “Once people have adopted an innovation, they’re loath to give it up,” says Gunther McGrath. Remote work, distance learning and contactless finance may be the new normal sooner than we expected.
What might normal look like moving forward? There may be more bicycles and electric cars on the road, as well as “robotaxis,” which Volvo CEO and President Håkan Samuelsson said will only work in good weather and in certain areas, up to a certain speed. “Hotels will have to be reimagined with lots of empty space,” says Mulligan. “If more people are working from home, they may like to rent a hotel room for a couple of hours; we may need an Uber for room space.”
Opportunities for remote education and healthcare will grow. There are only online courses for some degrees now, and in health, telemedicine, which hadn’t gone mainstream before Covid-19 due to regulatory concerns, now looks set to be adopted at mass scale, Sonali De Rycker, a partner at venture capital firm Accel, said at a digital event in mid-May.
The pandemic could be a breakout moment for virtual and augmented reality (AR), which are experiencing an unexpected spike in demand. Once confined to gaming and entertainment, these technologies are now demonstrating new potential in retail and the workplace.
In April, Japanese gaming application Virtual Market 4, a virtual marketplace comprising more than a million shops selling avatars and virtual apparel to shoppers using AR glasses, provided a glimpse of what shopping malls of the future might look like. Advances in these technologies also hold promise for “a new type of virtual office” with workers as avatars, analyst firm CB Insights writes in its 2020 Tech Trends report.
Some are working towards machine understanding of human emotion—so-called emotion AI—the focus of Boston-based Affectiva. Co-founder Rana el Kaliouby sees a future with therapybots that could help psychiatric professionals detect patients’ mood changes, or even personal coachbots. “They could help us remain healthy by telling us, ‘You haven’t exercised for the last three days. You need to go for a walk,’” she says.
Data, not money as we know it, may be the new currency. AI and advanced analytics require personal, historical and contextual information, and lots of it. “Data is the oxygen for this [new] world,” says Murat Sönmez, global head for the WEF’s Fourth Industrial Revolution Center.
Emerging countries may move faster in this new context, Sönmez adds, as larger countries confront issues pertaining to data privacy—whether Google or governments should control their personal data. Or, as countries innovate and deploy technologies at different speeds, the digital divide that already exists between different regions could become a chasm. “AI takes money, time, data and vision,” Firth-Butterfield says. “That makes it hard for new countries to enter the arena, especially those looking at 100% to 150% debt ratios. We must be well aware of what that might do to geopolitics.”
That raises significant ethical questions. “But who owns the data, what do you do with it, and who gets paid?” he asks. The WEF wants to create a blockchain-based mechanism that sets a market price for personal data.
It’s not the only technology-related development that raises thorny issues—often with significant practical implications. Improvements in chatbots may raise “the need for rules to require these devices to declare themselves as machines,” says Firth-Butterfield.
Despite the supercharged pace of innovation we’re experiencing right now, many of the innovations that are emerging may still end up on the experimental scrapheap. Some, at least, assuredly will. “What Covid has done is rocketed us forward in one step to adopt technology,” says Bradbury. “I don’t think it will carry on at the same pace, but I don’t think we’ll go backwards either. We’ve surprised ourselves.”