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Imagine a country with an army of technicians, a government that supports artificial intelligence and blockchain by setting a mandate and investing billions, large-scale technology companies that are rapidly experimenting and implementing on a large scale and an abundance of data to feed the application of these technologies. This concerns only the AI and the Blockchain playground which is China. The gloves are off, and in the next few years some of the greatest progress will be generated from the east. Here because.
An ambitious artificial intelligence strategic plan was put in place by the China Council of State in July 2017, with the goal of creating a $ 150 billion national AI sector by 2030. Afterwards, the Chinese President Xi Jinping has called on his country to take the initiative in developing new technologies such as artificial intelligence, the Internet of Things and the blockchain. Last year alone, the Chinese AI sector has received $ 28 billion in investment, and this level of investment is set to continue as all giants and technology banks are actively investing and upgrading their capabilities. For example, Baidu bets big on the development of smart home loudspeakers, translation software and self-driving cars. The e-commerce giant JD.com has set up a Smart City research institute that aims to facilitate the development of a "smart city" construction using artificial intelligence, big data and blockchain technologies. Another example is SenseTime, which received an investment of $ 1 billion from Alibaba to focus on facial and image recognition through the combination of computer vision and deep learning.
But how much of this work is really new and innovative? A recent study produced by Startup Genome has analyzed all the patents related to IA and concluded that China is now in first place in the world. The country has exhibited extensive experimentation, coordination and application of the IA in various sectors. Factor in the concept of "cross-pollination of technologies" such as the combination of AI with blockchain, IoT or even cloud, and the whole is much larger than the sum of its parts.
Consider the "Smart City" initiative of JD.com, which leverages IA, big data and blockchain technologies. The company is applying blockchain technology in various aspects of its business, from its supply chain and supply chain to the issuance of asset-backed asset block-blocking. In August, JD.com revealed its new Blockchain-as-a-Service (BaaS) platform. The tool, called JD Blockchain Open Platform, will allow companies to build, host and implement blockchain solutions without having to develop the technology from scratch.
According to Yu Jianing, director of the Institute of Industrial Economics at the Ministry of Industry and Information Technology, in the next three years it is expected that technology at the forefront will be broadly integrated into sectors that require product traceability, copyright protection, invoice verification and precision marketing. It will also be used in the energy and health sectors. We are seeing the first signs of a complete industrial chain with blockchain inside, ranging from hardware production, platform and security services to application services, investments, media and human resources services. As of March 2018, the number of blockchain technology companies in China has exceeded 456, while there have been 249 agreements related to the blockchain companies. In 2016, only 60 rounds of funding were registered, five times more than in 2015.
Globally, among the top 10 companies that hold blockchain patents in 2017, seven are Chinese, including the one with the largest number of patents, Alibaba. With the high number of counterfeit goods in China, blockchain technology has broad applications in supply chain management, as it can create a secure and verifiable record of the product's journey in the supply chain. Recently, Alibaba has helped Chinese liquor distiller Kweichow Moutai to prevent his rice wines from being counterfeited, for example by providing a public ledger for digital transactions. This approach could also benefit Chinese farmers who have struggled with food security problems and scandals. The Chinese e-commerce giants are already implementing blockchain solutions for food security and fraud.
The largest challenger bank in China was founded by Tencent, called WeBank. Today, WeBank has more retail customers than JP Morgan Chase in the United States. WeBank, based in Shenzhen, has a real-time blockchain core, capable of monitoring marketing campaigns, transactions, applications, cybersecurity threats and everything else operationally in real time with an impressive control center in the heart of Shenzhen. With over 80 million retail customers, this three-year bank is today a phenomenal player in the Chinese ecosystem, with a curve-like growth path and no signs of slowing down.
The success of technology giants in China has shocked the incumbents and has done so for some years. Today four of the five major retail banks have implemented core blockchain systems for retail businesses. All of them now offer their suite of retail products via mobile, an innovation imposed on them by people like Ant and Tencent. The investment of AI in the top 10 Chinese banks is not at the height of the entire US banking sector. The risk that fintech and technology are disrupting China is very real, with over 40 percent of deposits now moving outside the traditional banking sector. None of the top 50 banks in the United States has a core blockchain.
A great example of innovation among Chinese incumbents can be seen with the Bank of China undertaking a revelry to invest up to 1% of its annual income in the search for new technology areas. Last year alone, total revenue for the bank was up $ 70.9 billion. Together with the new research and development program, it is building three new technology platforms: big data support, cloud computing and artificial intelligence. The Bank of China uses blockchain technology to manage each of the three areas and a dozen or more other projects yet to be revealed. Most likely, the new plans will revolve around banking services, although it is still in the beginning. The bank currently holds 11 patent applications for blockchain technology, which ranks it among the top 20 global companies and the first in China. The patents held mainly concern specific problems that need to be solved, such as archiving, tracing and security issues.
Indifferent to privacy regulations and debates, companies in China are relatively free to exploit the huge amounts of data on consumption, payment, health care and transportation from about 750 million Chinese Internet users to refine their algorithms and test new products . Rapid advances in smart cities and the technology behind them will only fuel the vast reservoir of testing opportunities already available to Chinese innovators: from national personal ID data to cross-photos with their own data sets develop technologies of facial recognition.
What a dream playground to open new horizons.
Pat Patel is global content manager for Money20 / 20, the series of fintech conferences and payments.
