Industry Insider Archives

Automation: Robots are coming to snatch your jobs

Though a 2013 Oxford study mentioned that almost 50 per cent of all US jobs could be computerised within 20 years, 63 per cent of respondents to a Monster.com survey felt nothing could take away their jobs in the next 50 years or so. This shows that too many people are unaware of the automation wave that is coming soon.

Food service and manufacturing are predicted to be the first job industries which would be taken over by robots and AI for the most part. If some industries get highly automated, the other fields are bound to get affected too. Employees need to re-skill themselves and fast!

“Recently, the Indian banking system has seen the beginning of the revolution. Robots also make burgers and do all kinds of middle tasks, leaving behind only entrepreneurship or a temporary staffing. Artificial intelligence manages investments, handles everything like insurance claims and basic bookkeeping, and performs basic HR tasks,” says Avinash Bharwani, Vice President- New Business, Jetking.

It is your soft skills which will become extremely valuable when AI, automation or robots enter the job market. With the high pace at which new technologies are coming to the fore, we need to ask ourselves whether our work could be done by a robot. And if it can, we need to get worried.

The main jobs which will face a great automation risk include factory workers, drivers, cashiers, waiters and customer service personnel.

Which jobs are safe from automation and robots?
Creative jobs such as those of artists, designers, hairdressers, writers etc are safe as automation cannot replace true creativity Those jobs where humans display their skills such as that of a sportsperson, singer or dancer will be safe as no one would enjoy robots competing against each other or marvel at a completely artificial voice Jobs requiring empathy such as those of counsellors or therapists will be retained by humans. This category could also include to some extent teachers, vets, dentists, fitness trainers, police officers, fire-fighters etc

Jobs where you would need to cater to specific bits of knowledge such as that of tour guides or florists cannot be taken up by robots Jobs which involve creating, maintaining or fixing automation or AI technology would also be safe from robots This shows that while some jobs will be eliminated, many employees will find themselves becoming overseers to AI

Here are a few tips on how you can protect your job from automation and robots:

1. Be aware of how much automation risk you face
Do adequate research in your job field to understand if you should be worried about AI or robots taking over your job. List your skills and check whether any of them could be done by robots. Job skills which deal with people or need you to innovate and come up with new ideas are less likely to be automated. So, focus on enhancing these soft skills to safeguard your job from robots or automation in future.
2. Understand partial automation
It is quite possible that only a part of your job, such as inputting data and info onto spreadsheets, will be automated, which can actually boost your productivity. Often, employees spend a large chunk of their allotted work hours doing menial, routine jobs which do not utilise the human mind adequately. These routine jobs will be dealt with by using automation software, AI and robots. You need to make sure that your top job skills are polished and possess a human touch.
3. Work beyond your job description
To make yourself more valuable to your company, have a decent idea on how the rest of the departments work. Understand the goals of the company and increase your area of expertise so that if your job in under the threat of being taken over by automation, AI or robots, you have other options to bank on.
4. Look for a career move
If per chance you realise that your job will definitely be taken over by robots or automation and there is nothing you can do to change that, start looking for a different job which uses slightly different job skills that cannot be automated. Re-skill yourself accordingly – you can go for short certificate courses or sign up for a free course on Coursera, EdX or yet another MOOC website. Some companies also provide tuition reimbursement to employees looking to skill themselves further.

The automation wave would definitely help push forward human productivity to a great extent and the increasing proliferation of AI and robots is actually a great boon. “Artificial Intelligence is making technology more helpful and intuitive. And this is most evident in the smart-phone market. A phone that can learn your language, count your calories, answer your questions or recognize what a things look like,” says Jetking’s Bharwani.
India and automation

India too needs to join the rest of the world in pushing its way forward in the field of artificial intelligence. “China has progressed in AI-based research; India should also view AI as a critical element of national security strategy. India needs to be prepared for the digitalised future. Establishing AI-ready infrastructure, digital services and digital literacy is thus necessary to prepare India’s jobs and skills markets for an AI-based future. The bold urban initiative by government called ‘Smart Cities’ is also giving a hint to the public to stay ready,” says Bharwani.

The skills, experience and insight that a human being can provide are irreplaceable. Soft skills are the skills of the future. Machines and robots would only be taking over those jobs which are suitable for them.

As Bharwani says, “I believe the time is not far when the robots takeover workplaces and hence it is necessary to know how humans are required to handle them. AI is no more a toddler. Many AI researchers believe that the day will ultimately come. The question is, are humans ready for it?”

Artificial Intelligence can Empower Existing Education System

When discussing artificial intelligence, we form pictures of hi-tech machines and robots that are as efficient as the human mind. Amidst all this, the basic fact that AI is nothing but an advancement in technology is forgotten.

Today, AI has left no sector untouched by its innovations and novelty. Its contributions to the educational sector, especially, have been most beneficial because education forms the basis of all knowledge and progress.

Therefore, empowering and updating educational systems with AI has resulted in better impartment of knowledge and thorough and worthy evaluation of assessments by making them less of a blackbox.

For example, if a child is unable to grasp the concept of fractions, the system can look at whether the child was absent when that concept was taught, whether the teacher has historically had issues teaching this concept or whether the child is weak in prerequisites that would help him understand the concept.
Artificial intelligence, with its digital and dynamic nature, is progressing at an accelerated pace. A profound impact is also seen in the nature of services within the education sector.

Thus, we can conclude that the use of AI in the education sector, especially at the school level, has not only helped in easing the administrative burden but has transformed the realm of teaching and learning as well.
With AI, it has become possible to explore more and discover the vast depths of the education sector effectively.

Why B-School is initiating teaching Artificial Intelligence and Machine Learning

There is no doubt that Artificial Intelligence (AI) and Machine Learning (ML) are the two hot buzzwords right now. Examples of how AI and ML based disruptive practices are replacing traditional businesses on one hand while creating new business opportunities, on the other hand, are many.
In a nutshell, AI is the broader concept of machines being able to carry out tasks in a ‘smart’ way while ML prescribes the set of such ‘smart’ rules that the computer figures itself out.

2 lakh new jobs coming up in Artificial Intelligence sector
It is no exaggeration to say the current and the future belongs to AI and ML. It is estimated that in USA, there are more than 10,000 positions available at top employers across the country and additionally, the country is estimated to have 2, 50,000 open data science jobs by 2024.

Elsewhere — in EU, Canada and China — the demand for AI related jobs are not only in high demand, they are a few notches above the median salary.

India too is not far behind other countries in terms of AI hiring. Some estimates expect a 60 per cent rise by this year due to increasing adoption of automation, and the related IT industry will require 50 per cent more workforces equipped with digital skills.

All this translates to around 2 lakh new jobs this year.

Educational institutes need to provide future AI employees
Obviously, where the demand is there, educational institutes are expected to be at the forefront in bridging the gap. The question is — why are AI and ML finding its way into the B-school curriculum when it appears that AI and ML are still the forte of computer scientists, programmers and mathematicians?

Almost all of the top 20 business schools in India are now offering specialisations in Business Analytics while some of them are offering specialisation tracks in AI ML.

The answer is evident if we closely inspect two things:
One – what does AI ML typically do or can do?
Two — what are the expected roles of business schools?

Decision-making based on data inputs isn’t anything new: Benefits of AI and ML
To understand what AI and ML bring, we must acknowledge that decision-making based on data inputs isn’t new. Indeed, the traditional courses offered in B-schools related to decision sciences used computational algorithms as well as statistical models to solve problems.

Most of these algorithms are over a century old. However, our getting to a solution was limited by the way we deemed fit to go about it.

For example, logistic regressions, the favourite technique for many to solve binary classification problems (problems that needed us to correctly predict one group from the other), required us not only to identify the factors but also how they must be related to each other.

Undiscovered and hidden patterns in the data eluded us. ML solved this by letting the algorithms learn on its own, from the data and from itself the best route to classify.
Thus, the various boosting models, ensemble techniques as well as neural network models connected dots in the data which improved upon the results traditional algorithms could not.

The second finesse AI and ML brought are the unstructured data. This is what defines them and has not only gives us additional insights, it helps us address and tackle issues which otherwise we struggled with.
We now solve traditional problems using data obtained from video cameras, speeches, texts, social media interactions, images, satellite images etc. We no longer need to only focus on historical data to gauge stock market sentiments, often analysing texts in shareholder reports gives us better accuracy.
To estimate the footfalls in shopping malls, traditional survey methods are getting replaced by images of cars in car parks, to design agricultural forward contracts, satellite images of agricultural plots provide invaluable information.

Simply put, AI and ML have allowed us to access, process and utilize data in an efficient way to solve complex problems – both traditional as well as those posed in the new ecosystem. This is where B-schools fit in, almost by design.

B-school curriculums have always pride themselves for creating efficient decision makers. Managers are expected to decide and then execute their decisions. Often, such decisions must be made based on limited data and experience and yet must be made quickly.

It is not surprising, therefore, that some of those decisions face ex-post criticism, and perhaps rightly so. Decisions based on AI-ML are likely to reduce such errors.
For one, most of the unstructured data are not open to manipulations, and two, analysis based on that data reduces the human bias largely.

What is missing with AI and ML: the power of human intuition
However, there is an intrinsic part of human decision making that can’t be separated — intuition.
To a machine, a data is a set of numbers arranged in rows and columns where the column headings have no meaning! To a manager, the column headings are the most important. It is his training and experience that allows him to retain what is essential and cull out the rest.
Unlike a data scientist, whose journey with ML techniques is almost entirely about the column headings, he can trade-off accuracy for insight.

For example, an ML technique may always pick up ethnicity of an individual to determine whether he is worthy of receiving a loan, but a manager can use insights to exclude ethnicity as it may violate some fundamental principles!

A successful AI ML programme in B-schools must ensure that this balance stays. Curriculums must focus on ML techniques complimenting the managerial decision and not substitute them.
While Indian business schools were reasonably slow in riding the business analytics wave, it appears they want to remain ahead of the AI ML curve this time.

AI to enhance new job and employment engagement

Contrary to popular belief, Artificial Intelligence (AI) will have a “positive impact” on workplaces as it would create new job roles besides enhancing employee engagement and decision-making, a report said on September 6.
Artificial Intelligence to diversify human thinking
According to a Tata Communications’ study based on inputs from 120 global business leaders, Artificial Intelligence will diversify human thinking rather than replace it.

Artificial Intelligent: Statistics
As per the study, 90 per cent leaders agree that cognitive diversity is important for management

75 per cent respondents expect AI to create new roles for their employees
93 per cent believe that AI will enhance decision-making
AI to help people become more productive
“While AI will replace some tasks, it will also create new ways of working, new jobs and new roles in companies. AI will also help people as well as organisations become more productive. It’s not man vs machine, rather man and machine working together,” Tata Communications CEO and MD Vinod Kumar told PTI.

The report further noted that Artificial Intelligence has the potential to assess each employee’s skills and innovation priorities, and suggest activities to spark creative thinking throughout the organisational hierarchy.
This can democratise the creative process and increase engagement of all workers.

More focus on communication and innovation
AI will also free employees from most tedious repetitive tasks, allowing them to focus more on communication and innovation.
“Work will move from being task-based to strategic, enabling workers to enhance their curiosity and creative thinking,” it added.
According to Professor Ken Goldberg, a leading AI researcher at UC Berkeley, there is fear now that AI will surpass human thinking and that machines are superior to humans.

“Robots and AI are not going to take away this creative, insightful, empathetic aspect of almost every job,” Goldberg noted.

The Promise of AI is in Assistive Intelligence

This is a contributed piece by Francois Ajenstat, chief product officer at Tableau Software and has been written in response to a recent piece by our senior staff writer, Dan Swinhoe

As artificial intelligence surges to the forefront of modern society, research and debate swirls around the power and role it should play. More often than not, a cloud of skepticism looms over the topic of security of jobs in the workforce. However, if we consider AI as assistive intelligence rather than an asteroid on a collision course, humans can take advantage of the opportunities presented through its advancement. With this approach, humans enhance, rather than replace skills, leading to increased benefit from technology and improvements in quality of life.
Applications of AI have the ability to empower workers and increase efficiencies across industries and every aspect of the supply chain. To put this into perspective, a recent study from PwC argues that machines will “increase productivity by up to 14.3% by 2030” and the UK’s GDP could be up to 10.3% higher in 2030, equivalent to an additional £232bn ($307bn).

Yet the advantages of AI are not exclusive to a macroeconomic level. Benefits also extend to the individual level by fundamentally changing employee responsibilities. Workers are liberated from daily mundane and menial tasks to explore a higher level of thinking and creativity, ultimately expanding their job roles. Of course, this in turn will translate into positives for their employers as a more engaged workforce leads to increased sales, productivity and employee retention.

In fact, a recent Deloitte Insights study of workers in the public sector showed that many tasks could actually be handled through automation. The study found that documenting and recording information is the most time-consuming for employees, sucking 10% of work hours, which could be saved using technology like AI.

However, AI is not a replacement for tasks simply because they are time-consuming. The same Deloitte study concludes that tasks, like caring for patients, simply cannot be replaced by AI. For example, cognitive technologies cannot assess a patient’s mood or administer medicine, and therefore are not advanced enough to replace the role of workers carrying out such responsibilities. Currently, the reach of AI extends only to enabling human workers with more of the time and resources needed to provide exceptional patient care. Ultimately, AI compliments human intelligence, enabling workers to focus on tasks that require insights and experience beyond what goes into an algorithm.

This brings us to the fact that true business value comes from the capitalisation of uniquely human skills. Individuals fluent in the language of data are already in high demand across the corporate world. While machine learning backed algorithms and AI assist decision makers in accessing and analysing relevant data, some tasks are abstract or situational and require an amount of intuition and experience to make the best decisions. Humans are uniquely qualified to ensure the encoded assumptions are reasonable and then to ask meaningful follow-up questions that link answers back to business problems.

While AI can find unexpected outliers and identify patterns within the data, human analysis plays a vital role in gathering useful insights from what they find on the screen. This is especially true when those problems lie in industries such as marketing, where success is often related to one’s ability to make a personal connection between brands and consumers – human to human. AI can be used to sort through data and identify a target audience, but only humans have the emotional intelligence to create a story that will resonate with the right audiences and deliver results.

Just as any mammal adapts to a change in its environment, so too will the human race. Machines have yet to match humans in regards to solving contextual business problems with big data. They lack the ability to draw from personal experience, context, emotion and the ingenuity required to go that next step. Exploring this scope is therefore paramount in acquiring job security and increasing workers’ purpose.

The debate surrounding AI will only intensify with its continued expansion. As with any groundbreaking development, the fear of disrupting the status quo is unavoidable. However, disruption does not have to equal destruction.
What matters is how we respond and find new ways to thrive alongside technology.

Southeast Asia Lag Behind in Security

Why is ASEAN at risk?
“You have quite a wide variation in terms of where these countries are in their digital journey so that’s why the numbers you see in terms of under investment [are so different],” says Gareth Pereira, a principal at AT Kearney.

“There’s a wide disparity and that’s partly the reason why you see this region lagging behind.”

It may not come as a surprise that Singapore tops the list for cybersecurity. The city-state has invested eye-watering sums of money into smart city initiatives and digital industries. If cybersecurity was passed over, then it would be staring at a truly disastrous situation.

Singapore spent 0.22% of its GDP on cybersecurity in 2017, the third highest spender globally after Israel and the UK. Malaysia spent 0.08%, putting it in ninth place, well behind Japan, South Korea, and the US.

On the flipside, ASEAN countries like Brunei and Laos are much further behind, which drags down the average for ASEAN. These countries are not only spending less on security but their overall network preparedness is lower than their neighbors.

Pereira anticipates that this under investment “will persist over time” and is unlikely to be fixed too quickly. While ASEAN has a consensus-minded approach and will agree on matters like capacity building, it is down to each country to make a move respectively.

“We don’t see the sort of legislative framework that the EU has so that becomes a bit of an issue,” explains Pereira.

“You get countries like Singapore and Malaysia trying to push the envelope in terms of what the other countries should be doing but there’s no unifying framework in place in ASEAN to look at national strategy around cybersecurity, to look at legislation, to look at governance. There’s nothing to monitor progress in this area.”
In Europe, there’s the GDPR, which comes into effect in May and will hand out staggering fines to companies with poor security.

“I don’t think fines is the right way to go about it,” Pereira responds. “I think companies need to cognizant a little bit more about the value at risk for them.”
The costs of cyberattacks are much more prevalent and known now, so a case needs to be made internally for greater cybersecurity spending, which in the long term will lead to a greater return on investment.

As the cost of cyberattacks starts to impact the bottom line, the very top echelons of the c-suite will have no choice but to take notice. It’s no longer the realm of the IT department and CEOs are being held to account. After the infamous Equifax breach last year, its CEO Richard Smith resigned. Those at the top must pay attention.

What is the attack surface?
All the obvious targets are at risk: critical infrastructure, banking, telecoms, public utilities, healthcare, and transport systems.

The proliferation of IoT and connected devices in both the enterprise and among consumers has opened up a whole host of new threats and risks too. Again, Singapore has been the most advanced here – deploying sensors collecting huge amounts of data – but Jakarta, Ho Chi Minh, and Bangkok have all launched their own smart city programs. This has opened more avenues for attack.

“In the last few years, the transportation sector has seen the proliferation of IoT and connected cars, which have the potential to be ubiquitously connected and form a far larger attack surface for DDOS – multiple times larger than what we have seen in the Mirai worm example,” said one transport authority official quoted in the report, referring to the botnet that took down hundreds of sites through DDOS attacks in late 2016.

This digital connection between long running infrastructure and new technologies highlights the need for better coordination between the public and private sector.
To this end, AT Kearney has proposed a Rapid Action Cybersecurity Framework. This involves creating new agencies responsible for cybersecurity awareness and coordination among different sectors and setting standards that everyone follows. Singapore has taken an approach like this.
“Let’s say there is an attack on a bank in Singapore, this is brought to the notice of the Monetary Authority of Singapore, which alerts all the other banks. In future, it’s that process of collecting information and sharing it around which gets you better prepared to deal with emerging threats.”

How about the rest of Asia?
With all this talk of ASEAN, you may have forgotten about the rest of Asia. The continent’s biggest economies are a little more aware of the risks and taking action. China is obviously a regular topic of conversation but that’s usually on the offensive front. On the defensive, the Chinese government has instituted its own GDPR-like law.

In the approach to the winter Olympics, South Korea set up a cyber defense team to assuage cyber threats. Similarly, as Japan prepares for the 2020 Tokyo Olympics, the government has established a separate agency for monitoring potential attacks on critical infrastructure.

But Japan and other developed countries share one thing with ASEAN – skills shortages. Japan is now issuing its own agenda for stimulating IT security employment in the economy. The number of professionals coming out of universities is “simply inadequate” says Pereira and will need to speed up in order to meet demand. He points to specific shortages in behavioral and forensics analytics.

Skills and money alone won’t solve the problem though.
“It’s important where you’re spending that money, are you spending it largely on firewalls or are you spending it on other aspects, on what we call the cybersecurity lifecycle, which is how do you recover?” says Pereira. Attitude and approach will be key: “What is your response mechanism?”

Property Investment Market Continuing to Hit New Heights in Hong Kong

According to a report by JLL’s latest Property Market Monitor, the property investment market in Hong is continuously hitting new heights since last year, which is also riding on strong global investor interest.

A total of four en-bloc office buildings were sold for a total consideration of HKD 14.8 billion in 2018, which is about 17% higher than last year.

The en-bloc sale of 18 King Wah Road drew the most attention, setting a new record for the largest office transaction in Hong Kong East.

Decentralization remained as a key theme playing out among office tenants in the leasing market. The spotlight and the focus of leasing activity was on Hong Kong East and Kowloon East. Here tenant decentralization and consolidation requirements underpinned demand. Net take-up in the overall market amounted to 209,900 sq. ft till date. The net absorption in Central reached 33,000 sq. ft. as diverse tenants requested room for expansion.

“The broadening gap between rents in Central and emerging core business districts will add momentum to decentralization. We expect Hong Kong’s Grade A office market rentals to continue to trend higher, rising by up to 5% in 2018, with the support of the outbound growth of Mainland Chinese companies. Central will continue to outperform the overall market as demand competes for the pockets of space that exist,” reports Alex Barnes, Head of Markets at JLL.

On the back of a tightened vacancy environment, office rents in Central advanced by 0.7% m-o-m in January. There was a rise in rents in Hong Kong East region by 0.8% m-o-m, driven largely by increasing demand at the top-end of the market.

“The strong pricing achieved in the government sale of the Murray Road Car Park in May last year is now starting to permeate through the broader office market as investors reset benchmarks. With local money also flowing into the market, the record high prices being set in the market are no longer relying solely on PRC buyers. We expect capital values to rise a further 5-10% in 2018 even with interest rates set to rise further,” asserted Denis Ma, Head of Research at JLL.

The sentiment remained upbeat buttressed by record high land sale for government sites in Kowloon as well as strong gains in the local stock market, in the city’s residential market. The mass residential properties’ capital values raised up by 0.9% m-o-m in the first month of 2018 following to an increase of 1.3% m-o-m the previous month.

Mobile Ecosystem in Latin America

More than a billion individuals across Latin America will be connected to a mobile network by the end of the decade, equivalent to about three-quarters of the region’s population. Some markets in the region will be approaching saturation by this point, but many will still have plenty of room for growth. But the real story in

Latin America is not about market penetration: it is about the rapid migration to smartphones and super-fast mobile networks and the impact this is having on society and the region’s economies.

The mass-market adoption of smartphones is a relatively recent phenomenon in Latin America. Smartphones accounted for fewer than one in 10 connections as recently as 2012. However, declining handset prices and the increasing availability of subsidies and finance offerings by mobile operators has led to a surge in smartphone adoption in recent years. Today, smartphones account for about 60 per cent of the 690 million connections on Latin American mobile networks.

The move to 4G networks has also been slower in Latin America compared to markets such as the US and Europe – but 4G has now reached critical mass in the region, providing coverage to 70 per cent of the population. As of June 2017, Latin American mobile operators had launched more than a hundred 4G networks across 45 markets. 4G now accounts for approximately a quarter of mobile connections in the region, almost doubling from a year earlier, due to strong take-up of 4G in large markets such as Brazil, Mexico and Argentina. Local operators are set to invest nearly $70 billion in their networks by the end of the decade, much of which will focus on expanding 4G coverage.

5G networks are just around the corner too: the first commercial 5G networks in the region are expected to be switched on in 2020 and are forecast to provide coverage to around half of the population by 2025.

Around three-quarters of the Latin America’s mobile subscribers – almost 350 million people – use their devices to access the internet, more people than do so in the US. Moreover, Latin America has some of the most advanced and engaged mobile internet users in the world. Three of the top ten countries surveyed by We Are Social/Hootsuite on daily mobile internet usage are Latin American, with Brazil ranked second. Smartphones have also been instrumental in establishing Latin America as one of the world’s largest consumers of social media, with the vast majority of usage occurring over mobile networks.

With faster devices and networks, it’s no surprise that mobile data consumption is rising rapidly. At the same time, local operators are becoming increasingly successful at monetizing data traffic. In Brazil, for example, Telefónica Vivo reported a 144 per cent year-on-year increase in data traffic in Q2 2017, which it attributed to improving 4G coverage and strong adoption and consumption trends. But the operator was also able to report a 31 per cent increase in data ARPU, which more than offset declines in voice revenue.

As a result of rising smartphone adoption and 4G usage, the mobile ecosystem in Latin America provides a large, scalable platform for entrepreneurism. A vibrant tech startup ecosystem is emerging in major regional hubs such as Sao Paulo, Buenos Aires and Mexico City.

As a result of these trends, Latin America’s mobile ecosystem will be a growing contributor to the region’s economy over the next few years. In 2016, the industry added $260 billion in economic value, equivalent to 5 per cent of GDP. This figure is forecast to grow to $320 billion by the end of the decade (5.6 per cent of GDP), underlying the ecosystem’s increasing importance as a platform for innovation, investment and entrepreneurism.

Mexico: Fintech to Drive Competitive Growth

Mexico is making the greatest strides in Latin America when it comes to regulating the fast growing fintech industry.

A new bill doing the rounds promises to protect consumers and stimulate competition, keep a watchful eye over payment security and cryptocurrencies, and prevent money laundering or terrorist funding.
It’s a notably progressive step for Mexico to take. It will join a select number of other countries like Germany that have introduced explicit fintech legislation. According to Federico de Noriega Olea, partner at the Mexican offices of law firm Hogan Lovells, the law should provide more legal certainty for firms to carry out and expand their businesses, which may also mean greater access to funds.

It will at the same time place greater responsibility on companies to adhere to the rules, such as meeting capital requirements and reporting obligations. The more mature companies that have been carrying out some form of self-regulation may be better equipped to deal with this change. Younger companies that have just launched may struggle to adapt.

“The rules will definitely create a barrier to entry,” says de Noriega Olea. “Any regulation is in itself a barrier to entry. Again, the degree of such a barrier will depend on secondary regulation. I don’t believe the regulator is planning to create a high barrier to entry because one of the main goals of the proposed law is to foster competition.”

Bridging the credit gap
As per figures from 2015 from Encuesta Nacional de Inclusion Financiera (ENIF), a survey on financial inclusion, 44% of Mexican adults do not have a bank account. That figure may have changed slightly in the last two years but it speaks to a problem in Latin America’s second largest economy where adults have little or no access to credit or financial services. While there’s plenty of bluster and big promises, fintech is trying to bridge that gap and regulation can either be a friend or an enemy.

The International Finance Corporation (IFC) has been supporting fintech companies already active in the country, such as online and P2P lenders Afluenta and Kreditech, which provide a new bent on traditional services. Fintech has regularly threatened to upend traditional financial institutions but both sides of this coin will be affected by a change in the law.

“We consider that the legislation, as it is now, has the right elements to promote innovation in the financial industry,” says Carlos López-Moctezuma, head of new digital businesses and financial inclusion at BBVA Bancomer, one of Mexico’s biggest banks. “However, we need to keep track of the secondary legislation because those are actually the operative guidelines on how the fintech legislation is going to be implemented.”
BBVA Bancomer is very active in the fintech space itself. In August, it launched its startup sandbox programme, inviting startups inside the bank to work on new fintech services. These very companies will fall under the rules of this new legislation.

“However this is not something new for us in the way that we as a bank have been supervised, and prior to beginning working with another company, depending on the services offered by them, we have to be authorised by the authority,” López-Moctezuma adds.
“This is something that will affect fintech [companies] that haven’t been working with banks so far because they will have to spend resources in order to comply with the new regulation.”

Ahead of the pack
Mexico is the most forward in the Latin American region as far as implementing fintech regulations. Other countries haven’t moved as prominently but are starting to take notice. Brazil, the region’s biggest economy, is evaluating new legislation on how the technology should be regulated.

The Brazilian central bank published the draft law for consultation in August. According to an official from the bank, the law is specifically designed to address crowdfunding and online lending.

“The proposed regulation is expected to improve the regulatory framework for this type of electronic credit contract while contributing to the enhancement of efficiency and competition in the credit market,” he explains. “Such benefits are likely to reduce banking spread and boost the real economy, reaching microfinance operations.”

The Mexican law has not yet been passed and it’s expected that there will be many amendments made to the final document before the consultation period ends. Following the public consultation, the bill will eventually make its way to Congress but it’s difficult to pin down any time frame.

“Hopefully, it will be approved before year end,” says de Noriega Olea, “but I personally don’t believe that will happen because Congress has other priorities now, including discussing of the 2018 budget.”
That budget of course will be under much scrutiny in the wake of the earthquake in September which will mean funds being allocated to rebuilding and recovery, so fintech regulations may not exactly be on the forefront of Mexican politicians’ minds.

High Tech to Boost the Growth of Mexican

“Mexico is spending US$5 billion to modernise its ports as it seeks to double cargo handled from 250 million tons to 500 million tons during the six-year tenure of President Peña Nieto (2012-2018),” he explains.

As part of this project, Mexico is investing in three inter-oceanic multi-modal corridors. “[These are] the Northern corridor, which connects the Port of Mazatlan in the Pacific with the Port of Altamira in the Gulf of Mexico, the central corridor that connects the ports of Lazaro Cardenas and Manzanillo in the Pacific with the Ports of Tuxpan and Veracruz on the Gulf, and the Southern, or Tehuantepec Isthmus corridor, which is seen as an economic development engine for the region. This connects the ports of Salina Cruz in the Pacific with the port of Coatzacoalcos in the Gulf,” Diaz-Balart highlights.

One of the biggest recent challenges for Latin America’s ports has been the ‘stress’ they’ve experienced thanks to the cascading effect felt from shipping lines using ever-larger vessels.

As part of its plan to improve Mexican ports’ capacities, the government contracted APM Terminals to design, build and operate a new deep water terminal at the country’s second busiest port.
“This terminal will enable bigger volumes to be handled on the Pacific coast of the country – a strategic area for shipping connections to Asia,” notes José Rueda, Managing Director of APM Terminals Mexico.

The high tech terminal, called APM Terminals Lazaro Cardenas, opened to receive its first official vessel call in February, once phase one of construction was completed. Its depth is currently 16.5m, deep enough for today’s biggest container ships, but will be deepened to 18m to accommodate future larger vessels. Currently 750m in length, the quay will also be lengthened to 1.5km, with further cranes and rail tracks to be installed, eventually increasing the terminal’s capacity to 4.1 million TEU’s – twice the current capacity of Mexico’s biggest port, Manzanillo. This work is scheduled for completion between 2027 and 2030.

Semi-automated processes geared towards increased productivity
Regarding technology, it uses semi-automated processes that are geared toward delivering higher productivity and availability for clients, as well as contributing to Mexican trade growth by offering a new gateway for commerce. As Rueda highlights, APM Terminals believes that digitisation and automation are key factors to success in this sector – globally.

“Connectivity, delivery times and digitalisation are from my point of view challenges in the business, but not only regarding this region,” he notes. “Terminals in the near future will need to operate with service standards unknown today and this will be a basic requirement in less than ten years. We understand these requirements and at APM Terminals Lazaro Cardenas we are now ready to bring our customers the service of the future.

“Our semi-automated terminal has automated gates and stacking cranes are operated from the control room in the office building,” he highlights. “Both the gates and cranes are equipped with optical character recognition (OCR) and in general all areas of the terminal use the most advanced technologies available.”

The port’s high tech nerve centre is of course its control room. Even before a ship docks, its cargo manifest will be in the system and an unloading sequence worked out. The OCR identifies containers, allowing the operator to track its progress throughout the terminal and sensors assist them with trajectory prediction, alignment and stacking.

Cargo flows are segregated depending on the next destination and mode of transport. For example, if the container is moving on by rail, the terminal management system will schedule a railcar and interact with the shunting software to ensure that an optimal train composition is created in the on-dock rail facilities.

Once the container has left the terminal by whatever means, it is automatically tracked until it leaves APM Terminals’ custody.

“This investment brings the highest productivity and reliability in operations, providing error reduction, accuracy, reliability and cost savings. It also provides a safer working environment and enables our employees to develop new skill sets,” Rueda highlights.

A concerted bid to improve the supply chain to Asia
This project is just one part of a much wider undertaking to improve Mexico’s supply chain to Asia and the rest of the Americas. APM Terminals Lazaro Cardenas provides improved connectivity to its inland terminal in the industrial centre of Mexico City, home to more than 200 onward distribution centres, also helping to improve Mexico’s trade routes. But as well as boosting trade, projects such as this are boosting local communities by providing more skilled jobs, which in turn help regional economies.

“Before I joined APM I was basically an unskilled worker, even though I had a good high school education,” says Martin Aviles Luna, an STS crane operator. “Many of my colleagues were in the same boat as myself, so to speak, and they too have been set on a promising career path.’”