RBC outlines the potential of AI and Gen AI to revolutionise global sectors, forecasting across industries from tech to healthcare.
Despite varying levels of implementation, most industries worldwide recognise AI’s growing importance and are eager to keep competitive edge.
Yet a substantial part of staying competitive with AI is forecasting its impact in the future as well as understanding its potential now.
AI has been a transformative force in technology for decades, now with its applications ranging from voice assistants to predictive algorithms.
Additionally, recent advancements in Gen AI, which can create new content from vast datasets, have accelerated the potential for AI to reshape industries even further.
As businesses and governments grapple with the implications of AI alongside the race to utilise it effectively, a new report from Royal Bank of Canada (RBC) Wealth Management examines how Gen AI could impact sectors across the world.
The report, authored by Frédérique Carrier, Head of Investment Strategy for RBC Wealth Management in the British Isles and Asia, suggests that while Gen AI’s short-term benefits may be overestimated, its long-term impact could be profound.
Technology sector poised for disruption
Frédérique notes that the technology industry faces challenges, including ensuring accurate responses and protecting user privacy.
She says from her assessment:
“The development of AI technologies including the adoption of Gen AI is poised to become a disruptive megatrend and transform many businesses.”
However, it may take many years to understand the full potential of these technologies, as the “impacts could take some time to unfold.”
Adoption faces challenges like ensuring accuracy, eliminating “hallucinations” in responses, and maintaining data privacy.
The technology’s high cost also raises questions about its financial viability for replacing entry-level workers, highlighting the complex considerations in implementing Gen AI effectively across various industries.
While investors often overestimate short-term benefits of new technologies, they underestimate long-term impacts.
This means that staying informed about AI developments is crucial for understanding its transformative effect on the investment landscape.
However, in the technology sector, software and internet companies are at the forefront of the Gen AI revolution.
Frédérique highlights three key factors driving potential benefits:
Improved pricing power
Software companies are introducing standalone Gen AI products at additional cost.
Microsoft, the technology giant, has integrated Gen AI into its Copilot product across various services, including GitHub, a platform for software developers.
Enhanced developer productivity
A study by McKinsey & Company, a management consulting firm, estimates that software developers can complete coding tasks up to twice as quickly using Gen AI.
However, human oversight remains crucial for error detection.
Task automation
Both software vendors and their customers are expected to automate low-level tasks, potentially optimising cost structures and staffing approaches.
Frédérique warns that the rise of Gen AI may also increase cybersecurity risks.
The National Cybersecurity Center, a US organisation focused on cybersecurity policy, predicts that AI will likely increase both the volume and impact of cyberattacks over the next two years.
Broader industrial impact
Beyond the technology sector, Frédérique outlines potential impacts across various industries:
Energy and Infrastructure
The proliferation of data centres essential for AI and Gen AI services is driving increased energy demand.
This trend is expected to benefit natural gas power generation and related infrastructure.
Industrial Sector
The growth of AI is creating opportunities in electrical solutions, particularly liquid cooling for data centres.
Frédérique notes that only five percent of data centres currently use liquid cooling, a technology whose use is growing three times faster than that of legacy air cooling.
Healthcare
Gen AI has potential applications throughout the patient journey, from self-triage to ongoing patient engagement.
In medical imaging, AI can help identify anomalies, potentially leading to more precise diagnoses and faster turnaround times.
Financial Services
In wealth management, Gen AI tools could augment financial advisors’ expertise and boost productivity by streamlining tasks such as advice documentation and client communication.
“History shows that investors tend to overestimate the short-term benefits of promising new technologies, but underestimate their long-term impacts,” Frédérique concludes.
“We believe this is true of AI today. As Gen AI is rolled out across a wide range of industries, it will be important for investors to keep abreast of new developments in order to understand how this potentially transformational technology is driving changes in the investment landscape.”
