WELCOME TO THE JANUARY EDITION OF TECHNOL-AG, ADDLESHAW GODDARD'S MONTHLY TECHNOLOGY UPDATE.
- Google's LaMDA chatty AI bot will not be released due to fears for reputational risk
Google's Head of AI, Jeff Dean, has confirmed that the company won't be releasing its chatty AI bot named LaMDA to compete with OpenAI's ChatGPT as it's too much of a "reputational risk".
In response to employee questions at a recent all-hands meeting, Mr Dean said that Google's technology is just as capable as its competitor, but the company is in a more vulnerable position than OpenAI, a small start-up, due to its size and dependency of consumers to search information.
There are many concerns over such AI systems, including fears about bias, especially when the system is trained with only limited knowledge, and the fact that it can be hard to know whether an answer is truly correct.
DeepMind’s CEO and co-founder, Demi Hassabis, has urged people to proceed with caution as AI is now “on the cusp” of being able to make tools that could be deeply damaging to human civilisation.
In the absence of precautionary measures, more lawsuits over generative AI are expected. OpenAI and Microsoft were named in a class-action lawsuit alleging that the AI software, Copilot, violates US copyright laws. The case focuses on piracy culpability because the generative AI system is trained on a trove of licensed open-source code scraped from the internet with no credit given to the authors. The question for the court is whether copyright laws will evolve to protect intellectual property when AI is the pirate. How different countries decide to regulate AI and whether those regulations spur or hinder innovation will factor into the outcome of legal cases.
- Can the UK succeed in becoming the "Silicon Valley of the 21st century"?
Jeremy Hunt, UK Chancellor, has unveiled plans to develop a pro-innovation approach in digital technology and life sciences (a key growth sector). It is hoped that the UK's regulatory freedom outside the EU will allow it to pursue its ambition of becoming a science superpower and world leader in these sectors, in line with the ambitious vision to create "the Silicon Valley of the 21st century". These plans are part of a broader strategy to establish the UK as the best regulated economy in the world, ensuring that industry and investors have the certainty required to drive innovation, investment and growth. This will be achieved, in part, by anticipating, developing and implementing emerging technologies.
Five leading industry experts have been appointed to support Sir Patrick Vallance, the UK Government's Chief Scientific and National Technology Adviser, in identifying barriers to innovation and bringing emerging technologies to market. These experts will: support work to harness new technology such as AI; cultivate life sciences and drive the next generation of discoveries such as delivering genomics-enabled trials; and work on building green industries such as hydrogen power and battery development.
With other economies reforming their own rules, the UK needs to anticipate how the landscape for emerging technologies will change, in order to develop and maintain its competitive advantage in the global economy. The appointment of and consultation with leading industry experts should assist. If successful, this will be expected to raise living standards across the nation. Quantum technologies, for example, have the potential to improve vaccine and drug discovery and development, potentially leading to breakthroughs in medical research that puts the UK at front of the queue for new treatments. By securing leadership in new technologies, it is hoped that the UK will benefit from exponential growth, security, and prosperity in the years to come.
- Update on the future of Open Banking
Open Banking is now well established in the UK, with hundreds of fintechs and account providers participating in the Open Banking ecosystem serving more than six million users.
The success of Open Banking in the UK so far has largely been down to the creation of a standardised ecosystem which the 9 largest financial institutions in the UK were mandated by the CMA to create (via the CMA Order). This included development of standardised APIs enabling customers to share their account data securely with or request payments from their account, which are initiated on their behalf by certain trusted third parties. This has enabled fintech companies to build products and services which embed these features, such as budgeting, product comparison and savings apps.
With completion of the Open Banking implementation roadmap expected to be announced by the CMA shortly, HM Treasury, the CMA, the FCA and the PSR jointly published an update on 16 December 2022 on its vision for unlocking the future potential of Open Banking.
The vision is that Open Banking should promote greater competition and innovation for the benefit of consumers, businesses and the wider economy. Three priorities have been identified to deliver this vision:
- Unlocking the potential of Open Banking payments to support competition and innovation by creating greater choice between payment methods and the building of the next generation of payments, including more efficient and tailored services
- Adopting a model that is scalable for future data sharing propositions
- Establishing a sustainable footing for the ongoing development of the Open Banking ecosystem
The first stage to achieving this will be for the Open Banking Implementation Entity (OBIE) (which created the Open Banking technical standards and industry guidelines) to transition into an "interim entity". The fulfilment and maintenance of activities in scope of the CMA Order will continue to be overseen by the CMA. Other Open Banking activities which are outside the scope of the CMA Order (such as those that enable further innovation) will be overseen by a Joint Regulatory Oversight Committee (JROC).
The interim state will end when a long term regulatory and legislative framework is in place for Open Banking. At this time, a future entity will be established; however, it is yet unclear which regulator will be given regulatory powers over this entity. There is also a lack of detail on governance and funding arrangements so far. However, JROC does explain that governance of the future entity should be independent and underpinned by a set of values and cultures that include an emphasis on integrity and promoting ethical behaviours. The future entity should also be equitable with funding and liability arrangements shared across participants in a proportionate way, rather than being the responsibility of just the CMA9 (The nine largest banks and building societies in Great Britain and Northern Ireland, based on the volume of personal and business current accounts) (as is the case currently).
In relation to the responsibilities of the future entity, these are expected to include:
- Enabling the development of new Open Banking product and service propositions and support innovation and competition within the financial services sector which benefit consumers and businesses and support economic growth in the UK
- Providing and maintaining the technical infrastructure and critical services for Open Banking, as well as improving and developing existing and new technical standards
- Ensuring compatibility with the activities of other key actors in the ecosystem, such as the Faster Payments payment network operated by Pay.UK
The JROC is due to set out full details of its recommendations on the vision and design of the future entity during Q1 2023.
- Banks plan to enhance customer support by utilising artificial intelligence and other technologies
As many businesses and individuals continue to struggle in the current financial climate, it has been suggested that there is greater pressure on banks to ensure they engage effectively with their customers through the use of technology. According to experts, banks will play an instrumental role in supporting many individuals and businesses during this time.
There is a focus on how mobile applications can be more intuitive to help individuals manage their personal finances. As an example, there is voice recognition technology that can be used to identify a customer's emotional distress, which could alert a bank to potential financial issues.
As the cost of living crisis takes hold, the public are looking to banks to be inventive in how they can provide greater support to their customers, in order to make the process of engaging with a bank quicker and more personalised. Technology can be used to more effectively connect banks with their customers and enable the banks to provide a more customer focused offering.
As banks start to utilise technology to help people navigate financial difficulty, there is likely to be a greater onus on banks to put into place measures that alleviate some of the barriers to receiving personalised financial advice in a timely manner. Indeed, customers may start to raise questions if banks are not using the technology at their disposal (or investing in technology) to efficiently help customers faced with difficult financial decisions.
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