A third expect 'radical' digital disruption by 2021

Research and investment in new technologies, including artificial intelligence (AI), robotics and machine learning, are climbing to the top of business leaders’ list of priorities, with a third (34 per cent) of firms expecting their business to change “radically” in the next two years.

An HSBC survey of more than 2,500 companies in 14 countries found that more than half of businesses (55 per cent) are planning more investment in research and development of new technologies as they seek to become more customer focussed.

Amongst the technologies that have already been embraced, the survey highlighted AI (41 per cent), the Internet of Things (IoT) (40 per cent), wearables (37 per cent) and facial/image recognition (38 per cent).

Speaking to FStech, HSBC’s global head of client network Stuart Nivison, said that they were researching use cases for a number of new technologies, including voice recognition, robotics and biometrics as part of HSBC’s commitment to invest $15 to $17 billion in tech over the next three years – including hiring 5,000 members of staff globally.

Nivison said that “nothing was off the table” when it came to investment in research and development, regulatory sandboxes and digital technology and emphasised the focus on customer interactions as app-based services continue to challenge established players with innovative services.

“The lens we use is what is going to make it easier for customers to interface with us,” he said. “It’s not about funky technology, sometimes this means allowing customers not to deal with us, for example [accessing banking services] through Application Programming Interfaces (API).”

Asked whether incumbents were moving to digital offerings and AI and blockchain-driven technology as a way of protecting market share from challenger banks, Nivison said: “I don’t think it’s a question of catching up, for every successful challenger there’s several that have fallen by the wayside, compared to the entire market that’s out there.”

However, he said that digital-first businesses “raise the bar for everybody” and that in drawing up its own digital propositions, HSBC was engaged in “watching, learning and making our own investments”.

Nivison played down the long-term threat from digital rivals, saying “we’re in a big boat so we’re not going to sink”, but emphasised the need to spend now on new technologies.

“If you don’t embrace this you’re going to get left behind,” he said. “We’ve got disruptors in every industry and I think that’s for the greater good.”

When asked by the survey which technologies represented the greatest opportunity for their business, IoT devices came out on top, followed by AI and machine learning (60 per cent), 5G technology (59 per cent), robotics (54 per cent) and augmented and virtual or ‘mixed’ reality (AR/VR) on 54 per cent.

Nivison said the survey highlighted a number of surprising trends, including the degree of disruption expected as a result of technology and innovation, with 45 per cent expecting a “slight change” in the way their business operates in the next two years and 59 per cent predicting that automation of tasks would mean they would need fewer workers in the future.

In an effort to combat this disruption and retain valued staff, the survey also found that more than half (52 per cent) are planning to will boost spending on skills training. These planned investments in the human side of business came ahead of logistics (42 per cent), plants or equipment (34 per cent), and bricks and mortar premises (29 per cent).

A total of 76 per cent of companies said that technologies would make their staff more productive, 72 per cent think they will enhance well-being. Three in five (60 per cent) intend to introduce or increase flexible working practices to enhance well-being and adapt to a rebalancing between human and automated output.

Nivison said that the risk of reduced headcount and jobs losses would be counterbalance by “more fulfilling” and “value-added” roles for employees, and while one third of companies were planning to spend on digital technology, his concern would be for the workers in the two thirds of companies that were not currently planning on doing so.

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