AI unleashes innovation yet raises ethical concerns, say pension executives
As artificial intelligence (AI) rapidly transforms industries from finance to healthcare, investment experts must grapple with the technology’s immense potential for efficiency gains as well as its profound ethical challenges.
From real estate to healthcare, AI is driving unprecedented innovation and efficiency gains, according to John Livanas, CEO of State Super.
While this emerging technology does indeed have the potential to revolutionise various industries and sectors, offering significant benefits and opportunities, the swift advancements in AI also present ethical challenges and societal implications that cannot be overlooked, according to Peter Strikwerda, global head of digitalisation & innovation at APG Asset Management.
THE NEXT INDUSTRIAL REVOLUTION
State Super
"The productivity gains from AI could be substantial, marking another industrial revolution," Livanas, who leads the A$38 billion ($25 billion) Australian superannuation fund, told AsianInvestor.
Within this revolution, Livanas believes that the real winners will be those who provide the tools for AI, rather than those who simply use them.
"If you look at who excels in AI, companies like Microsoft and Google are prominent. They are becoming the largest AI facilitators," he said.
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"The companies providing the tools for AI will be as profitable as those directly harnessing AI. This situation is akin to those who sold shovels during the gold rush."
The transformative power of AI is evident across sectors, from automotive to healthcare, he said.
“Consider Tesla, a tech company from California that happens to make cars, essentially integrating AI into automobiles. The success of this company shows how far AI can push an industry forward compared to traditional companies,” he said.
Companies who can provide technological solutions to traditional sectors may find themselves outpacing established service providers.
“Google's acquisition of DeepMind and its development of AlphaFold is another example,” said Livanas.
“AlphaFold's ability to predict protein folding can revolutionise medicine by understanding how biological systems work on a molecular level. This could lead to significant advancements in pharmaceuticals without the traditional extensive manpower in research,” he said.
SPEED IS CRUCIAL
“The impact of AI will be substantial. We're seeing exponential growth in AI investments, partly triggered by advancements like GPT. Though there's a bit of a hype cycle at play, we shouldn't underestimate AI's real impact,” APG’s Strikwerda told AsianInvestor.
APG
There is immense potential for AI to enhance efficiency and reduce costs, particularly in data-intensive sectors like real estate and healthcare, according to Strikwerda.
"AI can process vast amounts of unstructured data that humans simply can't handle," he explains. "In healthcare, AI can soon enable devices that offer insights which currently require extensive research and incur high costs, significantly lowering these expenses.’
ALSO READ: APG: How it strikes the man-machine balance with AI
“It's also transforming how we approach real estate, from designing buildings to assessing climate risks and predicting shopping mall footfall.”
For Strikwerda, who leads innovation at the $606 billion Dutch pension investor, the speed of AI adoption is a critical factor.
"The real question isn't about the possibility of these advancements, but rather the speed of adoption," Strikwerda told AsianInvestor.
"Having technology available doesn't mean immediate implementation. It requires time for people within a company to adapt to these new tools, which is often influenced by the organisation's culture and mindset."
Balancing the benefits of AI with its responsible use depends on security, compliance, and organisational culture. Strikwerda highlighted two crucial factors: data sensitivity and the explainability of AI outputs.
“Highly regulated, risk-averse companies, like pension funds, often struggle to navigate these complexities while adhering to strict regulations and maintaining stakeholder trust,” said Strikwerda.
ETHICAL MINEFIELD
Both Livanas and Strikwerda stressed the importance of ethical considerations in AI deployment.
"There are definitely concerning aspects, especially around ethical issues like deepfakes and misinformation on social media," said Strikwerda. "It's becoming increasingly difficult to distinguish real from fake, which is alarming at a societal level."
The rapid pace of AI development poses significant challenges, he said.
"The pace of technological advancement often surpasses human adaptability, creating gaps in ethical oversight," he cautions. "For example, during election periods, misinformation can significantly influence outcomes."
Strikwerda believes that new AI solutions may be needed to combat these issues. "We might need new AI solutions to help us discern truth from falsehood," he said.
However, he remains hopeful that human judgement will continue to play a vital role.
"Personally, I prefer the concept of augmented intelligence over artificial intelligence," said Strikwerda. "This emphasises a balance where both human and machine capabilities are combined for optimal outcomes, which I believe is where the greatest benefits lie."
State Super’s Livanas believes the future of investment is being reshaped before our eyes — and the choices we make now will have profound implications for generations to come.
“It’s early days, and predicting outcomes and understanding the societal impacts is challenging,” said Livanas.
“In my role, while I focus on achieving the best financial returns, it's also crucial to consider the broader effects. AI adoption might widen the gap between more and less developed regions, which is another concern for global equity.”