Calum Chace, author of “Surviving AI” and Chief Marketing Officer at Conscium.

“Change has never again been so fast but will never again be so slow” – those were the words of Calum Chace, author of “Surviving AI” and Chief Marketing Officer at Conscium, who gave the opening keynote presentation at the Fund Operator Summit | Europe on 15 October 2024 in London on the topic of the changes the fund management world needs to make to be ready for AI technology.

Chace’s main theme is that artificial intelligence (AI) is a great tool for human beings and reticence around it is emblematic of the wider problems we have in society rather than anything we should be scared of.

"In 1800 80% of people in the USA were agricultural workers, in 1900 it was 40% and today it’s 1%, and none of those people are now sitting around unemployed."

In his wide-ranging discussion he touched on the malaise in our world, the issue with misinformation and populism and the issues people have with AI possibly stealing jobs and leaving society with more problems than it started if left unchecked.

This, he said, was unlikely. “In 1800 80% of people in the USA were agricultural workers, in 1900 it was 40% and today it’s 1%, and none of those people are now sitting around unemployed. They have other jobs.”

The same thing could happen with the world of work in the post-AI society. Fifty years ago, jobs such as Software Developers and Social Media Managers didn’t exist. Yet, now those employ thousands of people so there is no reason to think that humans won’t be able to think up new jobs or to spend the leisure time created by AI doing other things.

This last point was much of the crux of Chace’s arguments – that AI is currently being ‘tech-bashed’ by print media and populist politicians who are preying on the existing problems in society to combat it often to serve their own interests.

One of his examples of this was the “Magnificent 7” – the group of seven US-based tech firms – Nvidia, Tesla, Alphabet, Apple, Microsoft, Meta, and Amazon – that have the R&D budgets and current capability to drive AI and contrasted with Alibaba, Baidu, Tencent, and the Chinese government as the leading Chinese players. “Is it right that AI research is being controlled by a duopoly of the two biggest economies?” he asked, offering it up as possibly not being for the benefit of all. The technology is not the problem, he reiterated, but how we wield it – and also, who can create and profit from it.

This is relevant to fund managers for several reasons. The first is that the companies are creating products that could make the industry more efficient and competitive but that it could be with downsides. The second is that, from an ESG perspective, AI already creates complications especially when it is being propelled forward by US and Chinese companies that have radically different frameworks of rules around it than Europe, Canada, or Australia do.

This will likely affect many firms' ability to utilise AI going forward as many jurisdictions spend the next decade writing laws and frameworks around the topic to make sure it’s compliant with national culture.

“The future of investment operations in the age of splintered reporting regime,

new technological capabilities and a saturated vendor landscape."

Other negatives of the coming AI revolution mentioned by Chace include the deep fakes. “People were worried that deep fakes would play a big part in elections this year, but except in India where they were around but not a major issue, they largely didn’t. But they are playing a big part in fraud,” he said, which could be one of the most pressing issues for the investment community as more and more sophisticated scams are created that could soon make security checks much more complicated for investment firms too.

In the second session of the day, Arun Kelshiker, independent ESG Advisor and former head of Asset Allocation and Portfolio Strategy at Standard Chartered Bank, sat down to discuss the issues around “The future of investment operations in the age of splintered reporting regime, new technological capabilities and a saturated vendor landscape”. Kelshiker said that AI and the themes that Chace mentioned would play a big part in the future of the industry as it came through the proliferation of reporting regimes to come out the other side.

One of the key themes also in that discussion was the divergence between the US and Europe on regulation and framework – would the AI change be legislated in the US to the expected level it will be in Europe?

Kelshiker gave the difference between ESG that has emerged on each side of the Atlantic as a good example of how AI could change things. However, he largely thought it’d be a positive and enable better, more efficient, collaboration in companies from an operational perspective for fund management.

“There are lots more stakeholders involved in the industry now,” he said. “This is going to be an effective way of managing that.”

Both were largely in agreement though – whether we’re ready for it or not, AI is coming and it’s going to change a lot of things.

 

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