When we think of financial technology in the wholesale capital markets, the names that immediately jump to mind are Western companies: Bloomberg or Refinitiv; Ion or SS&C; FactSet or S&P; Amazon or Microsoft; Google or IBM. But what would happen if the race for AI supremacy puts China ahead of Western nations?

Even if you haven’t heard his name before, Kai-Fu Lee is one of the world’s foremost experts when it comes to artificial intelligence. Lee has held senior roles at Microsoft and Google, and is now chairman and CEO of Sinovation Ventures, a Chinese tech VC firm with $2 billion in assets under management. He also wrote the blockbuster book, AI Superpowers: China, Silicon Valley and the New World Order. He believes that a tipping point is approaching in the battle over AI supremacy. But first, the building blocks have to be put in place.

At the recent Hong Kong FinTech Week 2020, Lee took part in a fireside chat titled, “The Evolution of AI: From Rocket Science to Mainstream.” He said that as more engineers with machine-learning expertise enter the field, it will push AI toward what he calls “true adoption.” And as the talent pool grows, the next great challenge to true adoption will be data—and it’s precisely because data is so important to building machine-learning models that the financial services sector is poised to move ahead of other industries when it comes to incorporating them.

“The most important thing is to gather, as much as possible, the relevant labeled data that are structured and connect to optimizing some business result. That is the single [most important] thing that has been adopted, whether by a disruptor like Ant Financial or WeBank, and increasingly by financial institutions that realize they have to embrace AI and use AI within the [institution],” he said.

Ant Financial, which was meant to have its IPO on November 5 (and is currently TBD as this magazine went to press), is well known for Alipay, its mobile payments business, while WeBank is a private Chinese neo-bank set up by tech giant Tencent. Although these firms have not yet encroached upon the capital markets playground, they have a lot of data.

“If I were to make a bet, I’d say that quite a few of the traditional [financial] companies are going to do a great job at AI and be able to put up a good fight against the disruptors. … In the fintech area, it would be a tough, tough fight and it’ll be interesting to watch. There will be room for everyone to gain because it is so obvious that in a quantitative, data-driven game, the value of AI cannot be any higher,” Lee said.

Go East

In his book, Lee lays out a market environment where China—not Silicon Valley—leads the world in AI development. Some boxes may have already been checked off. China’s gains in the field of natural language processing and generation are not just theoretical; they’re in use today.

Take, for example, Ping An, the Shenzhen-based insurance, banking, and investment giant. Its NLP models consistently rank at or near the top of the General Language Understanding Evaluation benchmark—a list that is dominated by Asian firms. Ping An’s Smart Audio Robot was used to help contain the spread of Covid-19 in Wuhan, China. Its AskBob Doctor app, an AI-based medical decision-support tool, demonstrated AI capabilities in cardiovascular disease management that are comparable to humans. In a competition against a team of doctors, AskBob Doctor scored 97.7 points compared to 93.9 points for the humans. Ping An is aggressively pushing its innovations into the financial sector.

In his book, Lee says, “China lagged years, if not decades, behind the United States in artificial intelligence. But over the past three years China has caught AI fever, experiencing a surge of excitement about the field that dwarfs even what we see in the rest of the world.”

It’s this tenacity for development—as well as the desire to reap its riches—that is driving China’s attempt to become the first global AI superpower, as Lee puts it, in the near future. And if China—and by extension, Asia—becomes the global leader in AI, ahead of the US and Europe, that could one day change the power structure of capital markets technology development.