![A combination of powerful new technologies will free business from drudgery and power greater value.](http://web.archive.org./web/20170824224948/http://www.afr.com/content/dam/images/g/x/x/p/e/o/image.related.afrArticleLead.620x350.gxg5i9.png/1502949845860.jpg)
The digital disruption rippling through business and government today is merely a curtain raiser for what comes next.
The combination of artificial intelligence (AI), blockchain technologies and quantum computing will usher in new operating models, new industries, new possibilities. The future will be fuelled by data and technologies that harvest, protect, analyse and take action based on that information.
Professor Mary-Anne Williams, director of the innovation and enterprise research lab at the University of Technology, Sydney, believes that cognitive computing is already a game-changer.
"Cognitive computing is able to convert vast volumes of complex data into decision-making models that can be used take action autonomously without human oversight or intervention. We have seen these kinds of robust decisioning systems dominating the stock market for some time and increasingly they are being deployed in a much wider range of applications from chatbots offering customer service to medical diagnosis and treatment recommendations, autonomous lane changing in cars, and social robots working with children and the elderly," she says.
![UBank CEO Lee Hatton: "RoboChat answers 75 per cent of customer questions on the first attempt."](http://web.archive.org./web/20170824224948/http://www.afr.com/content/dam/images/g/o/v/o/8/w/image.imgtype.afrArticleInline.620x0.png/1502868615646.jpg)
Williams acknowledges there are skills challenges in terms of deploying these solutions but says early experimentation is essential.
"There is little advantage to being a fast follower in cognitive computing because the real value is in the experimentation and discovery phase where game-changing applications are invented and designed. It is unlikely a fast follower of cognitive computing will be able to lead in their areas of core capability.
"Businesses and governments with access to data which are able to experiment with it will inevitably dominate the landscape."
Simpler, better, smarter
Lee Hatton, chief executive of UBank, wants to be in that cohort. She describes the bank as a fintech with a banking licence.
![Nigel Dobson, ANZ general manager wholesale digital: "There is a lot of data we are generating here."](http://web.archive.org./web/20170824224948/http://www.afr.com/content/dam/images/g/x/x/q/a/u/image.imgtype.afrArticleInline.620x0.png/1502868108317.jpg)
She's not interested in best practice. "That's kind of boring, we want next practice." That's why UBank, a NAB subsidiary, recently launched Australia's first virtual assistant for home loans. One in 10 UBank home loan applications now begin with the IBM Watson-powered RoboChat, where customers complete a basic home loan application with the help of a virtual assistant before it's passed to the contact centre to complete the process.
"We want to make the process simpler, better and smarter for our customers but also for our bankers," says Hatton. "Helping customers instantly with the more common, easier questions makes the application experience better and lets our bankers spend time handling more complex questions.
"Right now, RoboChat answers 75 per cent of customer questions on the first attempt," she says, adding that the goal is to get to at least 80 per cent accuracy.
By using AI and cloud computing, organisations can do things faster and cheaper, she says. "Things that [used to] cost millions of dollars now cost hundreds."
![Professor Michelle Simmons is leading a team focused on making reproducible, high-quality qubits.](http://web.archive.org./web/20170824224948/http://www.afr.com/content/dam/images/g/t/x/o/e/3/image.imgtype.afrArticleInline.620x0.png/1485326512814.jpg)
The benefits of early experimentation are also clear for blockchain or distributed ledger technology.
CSIRO's Data 61 recently released a pair of reports into the technology. "Blockchain technologies originally emerged to support new forms of digital currency, but now hold promise as a new foundation for transactions in society," noted Data61. Among these potential uses are that it could support payments, escrow, notarisation, voting, registration and automated contracts or business processes.
The reports posit four blockchain scenarios to help organisations shape their thinking about the technology that hinge around aspiration, transformation, new equilibrium and collapse.
ANZ Bank is hitching itself to the transformation scenario with a blockchain trial to digitise the bank guarantee process in commercial leasing.
![Dr Joanna Batstone IBM chief technology officer Australia and NZ: "The world we live in is a quantum world."](http://web.archive.org./web/20170824224948/http://www.afr.com/content/dam/images/g/s/d/e/o/c/image.imgtype.afrArticleInline.620x0.png/1502868430172.jpg)
Nigel Dobson, general manager wholesale digital, says that ANZ, Westpac, Scentre Group and IBM have proved that a blockchain can digitise, manage, share, change, amend and make a claim on a bank guarantee. Ultimately he envisages a blockchain-based bank guarantee utility being developed to support all tenants, banks and property agents.
Overlaid with a cognitive platform the process would not only be streamlined, it would be far more valuable to all the participants.
"There is a lot of data we are generating here: identifying the tenant, landlord, specific lease, specific property and specific segment of that property," says Dobson.
Add in the data the banks already hold about tenants and their supply chains, Dobson believes, "There is a profound opportunity to use advanced analytics and predictive modelling to give insights to the tenant, the landlord and the bank. If you expand the scope of the network to other documents or instruments, you are probably scaling exponentially the data that you could observe and the conclusions you might draw."
Hyper-personalisation
Financial services is just one area that blockchain will impact; supply chains, Internet of Things (IoT), risk management, digital rights management and healthcare are poised for dramatic change using blockchain networks.
Michael Aaron, IBM ANZ blockchain leader, says ultimately the technology will facilitate intracompany and intercompany transactions, to promote efficiency, cut costs and enable new business models.
Add into that mix quantum computing and it will be possible to do things we can't think of now because we don't have the computing capacity as yet to run the encryption and consensus algorithms fast enough, says Aaron.
Quantum computing potentially opens the door for homomorphic encryption applications where work can be performed on data which is encrypted. This allows hyper-personalisation without privacy sacrifice.
UTS's Williams agrees quantum computing will prove disruptive. "The inescapable characteristic of a disruptive technology is that we can predict it will have a massive impact, but are not able to predict exactly how it will transform business, society and the global economy," she says.
"The most effective innovation strategy is to play and experiment, to be well placed to seize opportunities early and to shape the new paradigm to your advantage. Australia and Australian business leaders such as Telstra and CBA are working with universities and the Australian government to ensure the nation is a player in the new world order that quantum computing will create."
The team led by Michelle Simmons, Scientia Professor of Physics at the University of New South Wales and director of the Centre for Quantum Computation and Communication Technology, is focused on making reproducible, high-quality qubits (quantum bits) the building blocks of powerful quantum computers. Although commercialisation is five to10 years off, she says.
Already algorithms are being conceived for quantum computing, particularly in the optimisation and machine learning space. "There are a variety of uses in financial services including cryptography, complex behaviour analysis, prediction and hyper-personalisation," says Simmons.
There isn't yet a quantum computer large enough to tackle real industry and societal problems, but a number of organisations are investing in the technology. IBM for example has built a working 16-qubit quantum system, which is available to researchers, and has plans to make a larger commercial system – IBM Q – available to businesses, says Dr Joanna Batstone, vice-president and lab director, IBM Research Australia, and chief technology officer for IBM ANZ.
She says that potential applications are diverse, including molecular simulation for drug and new materials development. Quantum will also help deliver exact solutions to problems that today's computers can only approximate. Meshing quantum with machine learning and cognitive computing platforms, for example, could provide highly specific logistics planning, or untangle the complexity of molecular and chemical interactions leading to the discovery of new medicines.
"Quantum systems are designed to tackle problems that are too complex and exponential in nature for classical computing systems to handle. They give you the promise of finding a much more accurate solution in a faster time period," says Batstone, adding that computing is now at a threshold similar to that in the 1950s, at the dawn of programmable computers.
"The world we live in is a quantum world; quantum systems will enable us to understand and model the world in which we live in a fundamentally different way from the way we have been doing classical computing for the last 60-70 years," she says.
Scale corporate knowledge
As well as providing cloud-based access to quantum computing to speed access and experimentation, IBM is providing access to the Watson cognitive platform via application programming interfaces (APIs).
Organisations don't have to build a cognitive solution from scratch – instead they can plug into Watson using an API.
Australian start-ups Lingmo International and Ooovuu, for example, have developed, respectively, a Watson-powered earpiece that translates spoken conversations and a video-on-demand news platform connecting viewers to content based on their preferences.
Fergal Murphy, IBM business unit lead for industry platforms, says that there are now 40 separate APIs covering verticals such as health, financial services, banking, insurance and wealth management, and horizontal applications such as IoT, marketing and customer engagement.
In the financial sector, the ability to scale corporate knowledge and systematise regulatory compliance is driving many deployments.
"Your average bank in Australia is spending hundreds of millions on regulatory compliance activities. The global banks are spending more than $1 billion a year on regulatory compliance," says Murphy.
Streamlining and scaling compliance is Promontory Group's focus, says Dr Jeff Carmichael, its Australasian CEO. Its specialties include anti money laundering and know your customer (AML/KYC) tasks, compliant financial advice and risk governance.
The challenge for Promontory was that its human consulting services were not scalable. Having a cognitive platform such as Watson ingest the regulatory insights of its consultants allowed it to scale. "Lots of the groundwork can be done by a good cognitive system," says Carmichael.
In 2016, Promontory was acquired by IBM. The company had already worked with Commonwealth Bank on its financial advice review program.
Carmichael says manual review systems only allow a small sample of advice to be tested. "But what if every statement of advice is reviewed? That could prevent running into a major problem two to three years down the track that costs hundreds of millions of dollars."
While such a cognitive platform remains in development, Carmichael believes the approach will lower the cost of compliance and increase the quality of compliance.
Broader societal benefits are also possible: in Singapore IBM and Promontory are working to establish a financial crime utility leveraging both blockchain and cognitive computing technologies for AML/KYC tasks.
The trifecta of cognitive computing, blockchain and quantum computing will prove enormously transformative, with the opportunity for orders of magnitude more straight-through processing, says IBM's Murphy.
"Imagine what it would be like to get an instant mortgage or an instant financial plan; that's where I'm seeing disruption in the very near future."