Artificial Intelligence as a concept seemed very distant and tucked away till firms like Google, Amazon, and Facebook brought it into our daily lives and we started seeing its impact in our day to day activities and interactions. Today realizingly or unknowingly we are surrounded by AI in almost every aspect of life from Health to fitness, Finances, Entertainment, education, business and selling, marketing and market research media, and lots more.
Let us try and understand the impact of AI on the key aspects of economic inequality & business cycles and business productivity.
Economic inequality is one of the biggest changes that artificial intelligence is bringing to our doorstep. Artificial intelligence poses the greatest threat to people employed in low skilled or unskilled repetitive jobs, and as more and more companies incorporate AI into their business model, the disparity between low skilled and highly skilled workers is set to increase.
If we consider three major sectors – agriculture, industrial and service, we will observe that the manpower employed in agriculture has reduced the most over the years (although output hasn’t reduced that sharply), and the services sector has seen the steepest rise in a number of people employed.
Every threat and weakness also brings in an opportunity wrapped in strength, and AI is no different. Although a lot of jobs are at risk due to artificial intelligence, AI is laying the field open for several other alternate professions. Programming and testing professionals, coding heroes, data scientists, they all are going to be in great demand in the coming years. Upskilling and learning a new skill is something the workforce would need to embrace if they are to keep their careers on the burn instead of fizzling out.
Artificial Intelligence has impacted almost every facet of business already and looks set to forcefully influence many other areas too. One of the ways in which artificial intelligence is in the way business cycles occur and repeat. Business cycles are the periodic changes from great prosperity and increasing revenue to economic downfall and losses. The business cycles are impacted by AI because AI pushes these cycles closer together and makes them shorter.
We have the growth phase and the consolidation phase during the upswing, but these are now happening more swiftly because AI helps to improve by course correction in a much shorter time. Thousands of data points are analyzed with the help of AI, which then trains itself to come closer to the required output. Compared to that, humans would go through the cycle at a much slower rate.
Let us take an easy example to understand how business cycles are affected by artificial intelligence. In the banking sector, the first quarter of the financial year is usually the most popular for customers to open new accounts to align with the start of a new financial year. From the point of view of the banks themselves, the last quarter is a big quarter to push for new accounts and deposits, primarily because they are rushing to fulfill their annual targets. The remaining two quarters are comparatively less rushed.
What happens to this scenario when the bank applies artificial intelligence to its systems? For the first and last quarters, the system could throw up the details of existing customers who would be likely to need new accounts, so that the bank officials could target them. This data-crunching could begin in the last quarter (for first-quarter acquisitions) and in the third quarter (for last quarter acquisitions).
For the second and third quarters too, which are usually leaner, the prospective clients for new acquisitions could be highlighted. What this whole setup would do after repeating for a few cycles is that the usual cycle of quarters would be disrupted, and acquisitions of new clients would be more uniform throughout the year.
The future looks very exciting for industries who are using artificial intelligence, and the possibilities seem immense.