Updated: Feb 5
Have you chatted online with your Bank recently - who really is Sharon from credit card support; an online bot, an avatar or actually Saran from one of Bangalore’s call centres? And confess what have you asked Amazon’s Alexa - ‘Hello Alexa, do you give the CIA a copy of my dinner party chat’? What about the drone you noticed flying through your local park – was it taking photos of your local streets, your children playing or was it transporting blood to a nearby car accident? And your Fitbit – where does the information go? Is your step count shared with your insurer? Finally do you actually know what information your Bank is relying on in determining whether to grant you that car loan or mortgage?
There is no denying the rapid rise of ‘new technology’ during this, our 4th Industrial Revolution , poses challenges to governments, businesses and individuals globally as they grapple with the regulation and impacts of artificial intelligence and robotics, blockchain, cryptocurrencies, the Internet of Things (IOT), big data, biotechnology, virtual and augmented realities (new tech) to name a few. Given advances in data collection and aggregation, algorithms and computer processing, these new tech ‘machines’ can now perform tasks which once required human intervention. They are also able to provide a decisioning capability where new data sets are introduced without being explicitly reprogrammed.
As McKinsey noted in their 2017 report, Artificial Intelligence and South East Asia’s Future many such “machine learning” systems already have been put to commercial use with adoption growing around the world in sectors such as finance, health care, and transport and with these systems beginning to have a material impact in the UK, EU, the Asia Pacific region and the Americas.
While the adoption of new tech and its growth in different regions and countries will ultimately be driven by market forces, governments still need to play a critical role in its adoption and growth. While regulating technology has never been easy given the extraordinary pace of change and the debate around its impacts, a regulatory framework for new tech which contributes to its effective adoption and development and focuses public debate on ensuring new tech contributes to positive social outcomes and inclusive growth should be a framework which governments adopt and companies push to have introduced.
It is promising that public debate has already moved from the need for regulation of new tech to current discussion around the most effective form of regulation. The most obvious form of regulation is law - what form of law to adopt hasn’t been resolved though and given how rapidly technology is developing a key question remains: Is it possible to implement a legislative approach sufficiently flexible for the variety of scenarios arising with this ‘4th Industrial Revolution’ where previously these scenarios were only described in books like George Orwell’s 1984 or movies like Avatar?
If conventional and prescriptive legislative rules for new tech are adopted or proposed, both individuals and companies need to be alive to both the benefits and the risks or unintended consequences of any such legislation and consider its impact on their own new tech adoption or development. According to McKinsey, more than 266 million people across the ASEAN region lack access to affordable financial services. McKinsey’s view is that analytics and eventually AI could play a key role in bringing affordable financial services to disadvantaged and low-income segments of the population which have to date been outside standard banking systems. McKinsey gives the example of Alibaba’s development of Zhima Credit, an in-house credit bureau based on advanced analytics as Alibaba is opening the way for lending to groups previously outside China/Asia’s banking systems.
Other ‘open banking’ initiatives include the Hong Kong Monetary Authority’s launch in September 2017 of a “New Era of Smart Banking” announcing seven primarily ‘new tech’ focussed initiatives including the promotion of virtual banking, enhancing the ‘Fintech Supervisory Sandbox’ and adopting an ‘Open Banking’ policy through initiatives centred on Open Application Programming Interfaces (APIs) for the banking industry in Hong Kong.
In Singapore, the Monetary Authority of Singapore (MAS) has been encouraging financial institutions to develop and share their APIs openly, so that they can work with other service providers to give customers a richer and more seamless experience again based around ‘open banking’ principles.
While these programmes all appear to have constructive and inclusive outcomes, in Australia government recently announced it will compel companies such as Google and Facebook to provide Australian security agencies access to their customer’s encrypted data for national security purposes . What will these type of “data accessibility requirements” mean for an individual’s use of technology, the operation of private entities and a variety of human rights such as the right to privacy and freedom of expression and association?
The EU, UK, Japan, Germany, Australia, China, the ASEAN countries and even Estonia are approaching the regulation of ‘new technology’ in different and novel ways. As the EU rolls out its new General Data Protection Regulation (GDPR) which among other changes restricts decisions made on the basis of automated processes ; the Australian Human Rights Commission recently launched a Project which will consider how law, policy incentives and other measures can be used to proactively promote human rights in this new era of technological development.
In the meantime, the UK Government is in the process of establishing a new Centre for Data Ethics and Innovation and through a House of Lords Select Committee has proposed an ‘AI Code’ designed for both the public and private sectors. Japan has introduced a new ‘Robot Strategy’ which sets out a program for reform to establish a new legal system to effectively use robots and promote the development of different robotic systems as well as deregulating to promote the development of the robotics industry.
The Artificial Intelligence Singapore initiative is another pioneering “new tech” model, backed by 150 million Singaporean dollars in investment in AI over five years for the purpose of attracting resources, talent, and institutional support to Singapore and an objective of applying AI to finance, smart cities, and health care. This initiative stems from Singapore’s role in the Asia Pacific region as a financial centre with constraints on space and an ageing population. In Hong Kong, the Digital Asia Hub was recently created to provide a societal-level view of the implications of technological advances which will include examination of the appropriate regulatory frameworks. Estonia is considering giving robots status which is between the concept of a separate legal personality and an object that belongs to an individual. In Germany, regulation has already been developed which requires large social media companies to remove content inconsistent with local laws.
Other approaches to ‘new tech’ regulation include accreditation systems and professional codes of ethics or human rights compliant design with some already in operation or proposed. For example, Australia has a National Statistical Service accreditation scheme that accredits agencies to act as ‘Integrating Authorities’ tasked with aggregating data sets and Australia’s Chief Scientist, Alan Finkel has mounted compelling arguments in favour of ensuring public trust in the use of AI through a mark similar to the Fair Trade mark, which he has termed the ‘Turing Stamp’ (named for the famous computer scientist Alan Turing). Such a mark could give consumers the ability to ‘recognise and reward ethical conduct’ by procuring AI services or products bearing a ‘Turing Certificate’, which denotes they are worthy of trust.
The issues at the heart of new tech regulation are complex. Effective solutions can only be developed by lawyers, businesses, government and industry bodies working in collaboration to take advantage of the economic and social benefits that new tech and this 4th Industrial Revolution bring. As Ed Santow, Australia’s Human Rights Commissioner suggests, “technology should exist to serve humanity. Whether it does will depend on how it is deployed, by whom and to what end” and in my view how the law and regulation responds.
Liz Blackford is a Legal Consultant with KorumLegal. She is a passionate about ‘new technology’ in all its glorious forms although still needs iPhone lessons from her nieces. In a past life she has drafted, negotiated, advised on and governed technology deals for Banks, Energy Companies and government agencies while completing a Masters of Law & International Development in her spare moments. When not hotly debating contract terms with suppliers, Liz can be found somewhere on, in or near water and has not only survived sailing the Atlantic Ocean with limited satellite technology support but has recently learnt to kitesurf with the help of YouTube.