A report recently published by Moody's Investors Service on September 6 suggests that the convergence of artificial intelligence (AI) and blockchain technologies has reached a significant "tipping point." This intersection, it claims, has the potential to give rise to entirely new industries while simultaneously causing the contraction or disappearance of established ones.
The report underscores that the influence of AI and distributed ledger technologies (DLT), like blockchain, extends far beyond the realm of corporate finances. In fact, it could reshape entire industries. AI, with its capacity for automating tasks and boosting productivity, is expected to contribute to economic growth. This will partially offset the effects of aging populations and declining birth rates seen in many countries. In contrast, DLT is already paving the way for the emergence of cryptocurrencies and decentralized finance, even though it has experienced a mixed track record in these areas over the last 18 months.
Moody's highlights that while the transformation is likely to enhance process efficiencies and create new products in the financial sector, it comes with a set of challenges. Properly addressing financial, regulatory, and cybersecurity risks is crucial to reaping the benefits of The AI and DLT. report notes that these technologies will improve the creditworthiness of financial firms. Nevertheless, these benefits may not fully materialize until the next decade.
The report concludes that the economic and financial impact of technological changes, coupled with the policy and strategic shifts they provoke, is expected to be generally positive. However, it also emphasizes that how the costs and benefits of these advancements are distributed among individuals, companies , and nations will vary widely. Credit risk measures will be influenced by factors such as shifts in business strategy and implementation, financial performance, governance, risk management, and industry and economic conditions. The authors contend that this transformation will usher in new areas across diverse sectors like content generation, mobile, education, and healthcare. Established industries may shrink or disappear altogether as new ones emerge, marking a significant shift in the global business landscape.
