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Financial services will be more quickly impacted by language models, AI tech than other sectors: Tharman

It is important to think through and find ways to address the distributional consequences of the new technological revolution.

The financial services sector will be impacted more quickly by evolving technologies such as large language models (LLMs) and artificial intelligence (AI) compared to other sectors, says president Tharman Shanmugaratnam.

Speaking at the Singapore Fintech Festival 2023 for the first time since being elected president in September, Tharman says LLMs are always perceived to have the ability to take on more human characteristics, eventually reaching a point of singularity.

“There is no intrinsic reason why it cannot happen,” says Tharman in a fireside chat on Nov 15. “I don't think this is going to happen suddenly, but I think it's going to happen progressively. And I think it will happen for certain human tasks much faster than previous technologies have done.”

This technological revolution is set to have a more profound effect on the workforce and society than any previous technological revolutions. As such, it is important to think through and find ways to address its distributional consequences, says Tharman.

He highlights that LLMs and AI has the potential of taking over cognitive tasks — reaching the population of better education and better incomes. As such, it might upend the traditional hierarchy of jobs, shifting the way IQ is valued over EQ.

“There is a whole range of jobs that we think require IQ that can be taken over quite quickly and that can be done more efficiently using LLMs and AI. We will then have to think hard about the jobs we really value — the jobs that require teamwork, the jobs that require collective imagination — and we have to value them accordingly,” he adds.

To this end, Tharman notes that while AI can be a huge enabler, there are still areas that require human judgement and decision-making.

In financial services, for example, AI is a phenomenal tool for financial advice with the ability to speed up analysis and provide customised advice. However, as it concerns people’s hard-earned life savings, there is still a need for human intervention and ethical rules to ensure that the right advice is being provided.

In response to the adequacy of governance surrounding the new technologies, Tharman suggests for it to be not too all-encompassing and comprehensive, paying more attention to avoiding the worst. It is important to think about challenges of years to come, and also involve a coalition of countries instead of just the most advanced economies.

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