My car parked itself this morning and Amazon has microphones and cameras throughout my house that I bought and set up myself. My fridge can tweet my oven which then tells my thermostat to lower the temperature in the kitchen…OK, I might be exaggerating a bit but technology occupies every corner of our lives and we cannot escape it. Welcome to the virtual world, folks.
Technology moves fast, whether the world is ready for it or not (it rarely is). We have reached a point where, even if you don’t want to embrace technology, its rapid pace of change on just about every aspect of our personal and professional lives makes resisting it impossible. And, while these advances in technology usually emerge to improve a process or solve an existing problem, sometimes they bring about new challenges we didn’t expect.
Challenges in Search of Solutions
There is no doubt that many emerging technologies can significantly benefit companies. The key to capitalizing on these benefits is applying new technologies to real problems, and ensuring you use the right technology for each problem. Take blockchain, for example. It’s easy to build an application or create a proof of concept with the technology, but not so easy to implement it in a situation where you need to consider the entire business ecosystem when going live. Regulatory and business practices may need to change to leverage the technology.
For example, at Northern Trust, we have a patented blockchain solution that helps us serve our private equity administration clients more efficiently. Many of our clients — and our own operations teams — will ultimately reap the benefits of this innovation. However, one of the hardest issues to solve prior to implementation had to do with the transfer of ownership between a general partner and limited partner. Specifically, where the transfer of ownership occurred, since in this new world, it would happen in the cloud (via Blockchain and smart contracts) and not in the physical location of the underlying fund (in our case, Guernsey). We worked with the regulators and tax authorities and concluded that as long as the exchange of blockchain “keys” was executed on the island of Guernsey the transaction would be considered to have occurred in Guernsey. This process took longer to nail down than building the first minimum viable product!
Is There a Trade-off?
The advancement of home devices and lifestyle technology is also transforming our personal lives. From self-driving cars to home assistants, these technologies are catering to the demand for convenience and efficiency in our society. But is there a trade-off to these ‘benefits’?
Smart devices are meant to improve our lives, but are you one of those people that follows Google Maps or Waze regardless of what it says to do, or do you occasionally ignore it? What do you think the driverless car will do? Are you happy giving up this level of control?
Air travel is also being transformed in this digital world. As a person who travels thousands of miles a year, I was excited to learn that airports are implementing facial recognition technology to help streamline the security process. But where does this data go? How is it going to be used? Is the software up to snuff? There were issues with the no fly list in the US for some folks that had similar names. What about people with similar faces if software is 99% accurate? Will there be accuracy issues? And are we all happy registering our faces? Ultimately, technology advancement and its use of data will bring huge efficiencies but may require us to give up a lot of privacy. How the world deals with this is yet to be seen. In the EU, there is new regulation around data privacy to allow people to “opt in”. My view is that for at least the next decade we will see more and more of this type of legislation.
Bottom line is that there is no ignoring the digital world we live in and the rapidly changing technology that surrounds it. This is a good thing, as more and more problems are being solved in new and innovative ways. However, this rapid pace of change will undoubtedly bring about new challenges that we can only prepare for with anticipation and awareness. We can’t know what these new challenges will be or how we will overcome them, but as we embrace new technology, we must remain alert to possible implications.