Technology has always had the power to shape and support good causes. And equally, the power to dismantle them, writes Robert Steedman, Financial Services and UKI Blockchain Practice Lead at IBM.
Technologies deployed for data aggregation for virus tracking, financial inclusion, cryptography, high speed networks, water cleaning, AI and education also contribute to the case. The opportunity is a function of the interaction between business challenges within a macroeconomic context and the ability to maximise the potential of current and emerging technologies over a sensible planning horizon.
The opportunities must also be considered in the context of a shift in the nature of work and new normal on how we communicate, interact and engage. Of course, there are many goals and challenges that can be considered.
The investment for the climate crisis
Following the recent COP26 in Glasgow, one timely illustration of ‘technology for good’ is in the sustainable infrastructure finance space. It is estimated that there is a $103.5trn global infrastructure investment that is needed by 2030 for a 66% chance of 2oC. The financing gap itself is estimated at $3.5trn per year. Private sector finance is not flowing in significant size to fund projects. Development Finance Institutions (DFIs) and the public sector in general are key participants in the sector, but they have limited balance sheets.
Infrastructure needs to be designed, built and operated in a sustainable way, otherwise it will lock the world into a high emissions trajectory and not be resilient to climate change.
Addressing this need to build a deeper and more liquid asset class for sustainable infrastructure finance is the challenge a consortium of 80 public and private organisations have decided to tackle. Organisations such as HSBC, Standard Chartered, IBM, Source, EPPF and Liquidnet are working on an industry platform to remove friction and increase the flow of funds to those projects that will accelerate the sustainable transition to a greener future for us all.
Announced at COP26, the platform will draw on key technologies from AI, blockchain, automation, IoT and cloud to transform how this vital process works.
Innovation, evolution and emerging technologies
We are also finding that convergence of technologies has become the norm. We are engaged with major telecommunication companies looking at proposition interoperability across multiple blockchain platforms. Equally, complex business problems require multiple technologies to combine to solve and maximise business benefit across the network.
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An example of this from Cambridge University was presented at the February APPG Blockchain evidence meeting. The example used to illustrate the discussion was a goods optimisation scenario. Today, only 63% of heavy goods vehicles are full – largely due to incentivisation and logistical issues.
Emerging technologies like IoT could be used to sense where vehicles are coupled with AI modelling to optimise route allocation and Blockchain to underpin the ecosystem could be used to optimise the process. Looking forward, these complex optimisation problems can also benefit as we shift to quantum technologies to further optimise the ever more complex planning and logistical processes across supply chains as we move to a cleaner, more efficient future.
As these technologies mature and become both more powerful and accessible, we will see a shift from the current materials, science and financial services use cases to a much broader set of use cases. In fact, it is this combination of emerging technologies that will have the most dramatic impact on how we work and live.
To understand how executives are addressing sustainability more broadly, the IBM Institute for Business Value (IBV) and Oxford Economics surveyed 1,958 executives across a variety of manufacturing-oriented industries. While 86% of companies have a sustainability strategy only 35% have acted on that strategy. 70% of transformation trailblazers are using hybrid cloud to advance their sustainability objectives.
Clearly, there is much to do to achieve our collective goals; however, one thing is clear: technologies such as blockchain, AI, cloud and quantum will be the vehicle that will sit alongside the social and political will to get us to a more sustainable future. Each one of those technologies is on its own path of maturity and attractiveness as illustrated below from IBM’s most recent CIO study.
Source: IBM, Institute of Business Value, CIO Study 2021
Those use cases closest to economic and political priorities will naturally come to the fore.
New ways of doing business
Trade is a key area that will receive focus from innovative technologies and platforms. The significant activity to establish new trade agreements, level up across our regions and establish initiatives such as freeports and supply chain enhancements will build momentum in the economic recovery.
Many parts of this trade-related infrastructure have seen interesting blockchain developments to remove friction from vital processes. Examples include Tradelens in cargo shipping, We.Trade for Trade Finance and the digitisation of supply chains through blockchain-based solutions such as Food Trust and responsible sourcing technology.
Increasingly, we also see focus and investment on interoperability between these platforms and the convergence of multiple technologies around data, analytics, AI, IoT, blockchain and cloud to optimise a much larger ecosystem challenge such as a port and associated hinterland.
Changes to the talent pipeline
We will also see a dramatic increase in demand for talent in these new technologies which will shape the skills and education paths of our next generation. These skills will need to be developed quickly as organisations transition off old and unsustainable technologies across a similar time horizon. These newer technologies will likely remain largely invisible to the consumer whilst underpinning the seismic shifts involved with initiatives such as digital currencies, driverless cars and the metaverse.
However, convening cognitive business networks and ecosystems is not easy. How we guide and overcome these complexities leaves much room for experienced professionals and advisors to add value. In general, these technologies exist and are becoming increasingly easy to consume and integrate. What is never easy is the ability to encourage numerous, often competing, organisations to align and act at pace toward a common goal.
Technologies like blockchain have huge potential to remove friction from our economy, deepen trust and fundamentally change the way we work and interact. They will disintermediate the unwary, dismantle the status quo in many industries and disrupt those who are comfortable with existing norms and processes.
Many of us look forward to this new world and the opportunities it will offer to solve the most difficult global challenges, like sustainable infrastructure, finance, or the even just to influence the simplest of tasks – such as being comfortable that your weekly shop only involves a supply chain you approve of.
About the author
Robert Steedman is Partner, Financial Services and UKI Blockchain Practice Lead at IBM. He has worked for many years with senior clients in Banking, Wealth Management, Telecommunications and Sustainability.