Start small and get comfortable quick – genAI is coming

Jun 25, 2024 – 9.47am

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The promise of generative artificial intelligence, or genAI, is increasingly clear. For large business, the technology has shown it can help manage risks in real time, and potentially more accurately than before. It can help replace mundane, administrative tasks with automated processes. And it can help build a better and more personalised experience for customers.

Those reasons and more are why businesses around the world are prioritising the trillion-dollar opportunity genAI offers. And if they want a slice of that opportunity, it’s up to businesses to start preparing for this world now, if they haven’t already.

Managing director, institutional Australia & PNG at ANZ,Tammy Medard: both consumers and business clients will soon come to expect the hyper-personalised experience only genAI can deliver.

Implementing new technology requires striking a balance between centralising capability to solve problems once, for everyone, and allowing the freedom for innovation to occur at the fringes. As we’ve seen through the implementation of now-mature technologies like the cloud, this needs to be underpinned by strong risk management and governance frameworks.

Effectively managing this innovation will be critical, as both consumers and business clients will soon come to expect the hyper-personalised experience only genAI can deliver.

Part of that involves a technological shopping list – data capability, compliance requirements, ongoing staff training and more. It can be an expensive exercise, and one boards may be reluctant to endorse in a high-inflation environment. But avoiding the cost today risks a far greater long-term one in a genAI-dominated future, as the cost of catching up to fast-moving competitors will only grow.

Anthropic CEO Dario Amodei recently told Time that “frontier models” of AI – cutting edge systems breaking new ground – currently cost around $US1 billion to train. But costs for the next generation could be more like $US10 billion. That increase will inevitably flow through markets.

Even organisations that start investing around the edges now, and get their businesses ready to maximise genAI’s potential, could enjoy a measurable advantage over those that sit back, wait and see.

For many businesses, a critical first step on the genAI journey will be to upgrade their systems for use of the technology. The total computation power required for AI is reported to double every 100 days. A survey by US firm Couchbase found investment in IT modernisation is set to increase by 27 per cent in 2024.

At ANZ, our role supporting customers big and small gives us a unique perspective on this shift, and we’re seeing many clients put data optimisation firmly at the top of their technology agendas, regardless of their immediate appetite for genAI.

Using cloud services is a popular solution, and there are no shortage of partners looking to provide those services. Others in the space are diversifying cloud partners to mitigate concentration risk and keep the costs competitive.

But these centres have an additional cost – namely, energy. A report from the International Energy Agency suggests by 2026 the electricity usage of data centres will have doubled the total demand seen in 2022 — 1000 terawatts, or roughly the annual consumption of Japan. How businesses balance this reality of genAI with their net-zero emission targets is another challenge, and one businesses and their cloud partners will need to address together.

Cybercrime is already a growing risk, and addressing it a growing cost. Bad actors that can take genAI to supercharge their activity only exacerbates that risk. In response, we’re seeing business ensure staff are appropriately trained in the critical role they play in protecting systems from vulnerabilities.

GenAI also faces a hurdle around mindset, and persistent fears of human obsolescence. But it’s already very clear this is a technology that should always have humans in the loop. GenAI is here to assist, not eradicate human judgement all together.

Appropriately weighing the costs, risks and benefits of new tech is a challenge for all businesses. It’s perfectly normal for there to be trepidation at board level when it comes to the impact of genAI. Leaders are right to be both curious and cautious.

Starting small, with a focus on data and clarity around use cases – exactly how genAI will add value to your business – is a good place to start. There’s value in taking time and it’s sensible for boards and C-suites to only move when an organisation is ready.

There is understandable caution about the tech, but genAI is here. For business, the response we’re seeing is to start small and get comfortable – quickly.

Tammy Medard is managing director, institutional Australia & PNG at ANZ