Discover how AI is reshaping the digital economy, driving efficiency, innovation, and new business models across industries.
Artificial intelligence (AI) – through technologies like the Internet of Things, machine learning and big data analytics – has revolutionised the digital economy. New and exciting opportunities to increase efficiency or personalise customer experiences are reshaping industry, commerce, and business.
Over the last decade, the rapid adoption of AI has transformed businesses and organisations that function as part of the digital or digitalised economy (see Bukht and Heeks’ definition below). From manufacturing, supply chain management and logistics to the financial sector, health, education, security and more.
Below, we look at the impact of some of the key AI technologies.
What is the digital economy?
"The core of the digital economy is the 'digital sector': the IT/ICT sector producing foundational digital goods and services. The true 'digital economy' - defined as "that part of economic output derived solely or primarily from digital technologies with a business model based on digital goods or services" - consists of the digital sector plus emerging digital and platform services. The widest scope - use of ICTs in all economic fields - is here referred to as the 'digitalised economy'."
Rumana Bukht and Richard Heeks
Improving productivity, personalisation and efficiency
Some of the biggest tech companies have heavily invested in generative AI in recent years. Microsoft’s Copilot (previously Bing Chat), Google DeepMind’s Gemini and OpenAI’s GPT-4 use large language models (LLM) to generate, edit, and iterate written and visual content.
Businesses and organisations can use these free systems to create their own advertising or promotional content, uploading and refreshing past content, saving both time and money from having to commission such services separately. They are also used to create online customer services which, according to the Boston Consulting Group (BCG), once implemented, can increase productivity by 30-50%.
Conversational AI bots can resolve frequently asked questions, collect customer data and user feedback, give personalised product recommendations, optimise multichannel customer communications, target advertising, qualify leads and reduce the number of abandoned shopping carts. Erica, the Bank of America’s AI-powered virtual financial assistant has helped more than 41 million clients and over two billion interactions since its launch in 2018.
More and more, generative AI is filtering through to other industries – from healthcare to Hollywood. Disney’s latest Indiana Jones instalment, for example, used cutting-edge face replacement machine learning (ML) technology to transform 79-year-old Harrison Ford to move like a 35-year-old.
Google DeepMind is using AI to predict the structure of proteins and molecules to help scientists at its sister company Isomorphic Labs develop drugs to target diseases more effectively. Similarly, Japan’s SoftBank Group has set up a joint venture with Tempus AI to analyse personal medical data to come up with personalised treatment recommendations.
AI also has a pivotal role to play in establishing highly efficient, connected and smart manufacturing operations. The global AI in manufacturing market was valued at $3.2 billion in 2023, but is forecast to rise to $20.8 billion by 2028.
Cobots – collaborative robots – can work safely alongside their human colleagues performing various operations, such as glueing, welding, picking and packing, or detecting equipment damage and product defects. When integrated with sensors and wearable technology, they can also warn factory workers about any hazards on the shop floor.
As an example of best practice, the International Federation of Robotics (IFR) cites Carrier Transicold, a company in the home appliance industry with over $20 billion in revenue. It gained over 8,000 annualised hours of productivity after installing a compact 6-axis cobot.
The cobot’s ability to assist with labour-intensive tasks like attaching access doors on refrigeration units freed up human workers to focus on more complex and higher-value operations. The company’s adoption of radio frequency identification (RFID) has also improved inventory tracking reducing human error and boosting operational efficiency.
Reshaping business, business models and jobs
One of the biggest challenges for businesses seeking to capitalise on AI is understanding the changes that need to accompany it. BCG’s 10-20-70 rule advises CEOs to focus 10% of AI efforts on algorithms, 20% on tech and data, and 70% to supporting people and adapting business processes. It suggests that companies need to anticipate talent needs, attract best-in-class candidates, and develop talent quickly.
Tasks will largely be augmented not automated by AI. The World Economic Forum’s Future of Jobs Report 2023 found that almost half (49%) of companies expect adopting AI to create jobs. This compares with 23% of respondents who expected it displace jobs. Only four of the 27 industries studied expected net job losses: oil and gas; real estate; media, entertainment and sports; and production of consumer goods industries. In other words, there will still be jobs for humans, but the jobs may be different. Both employers and employees need to be agile and able to adapt to change.
Where can I learn more about the digital economy?
If you want to learn more about the transformative effect of digital technologies, you will explore how digital innovation is being used to solve some of society’s biggest issues on the MSc in Digital Economies. From driving the net zero agenda via clean energy and responsible production, for example, to reducing inequalities by improving access to essential services.
Furthermore, the specialist module AI and Society provides a comprehensive overview of the latest AI applications and the potential consequences of such technology for individuals, society, and regulators.
Taught by experts from the Digital Humanities Department at King’s College London, this part-time master’s degree is studied completely online over two years. It is one of the only programmes of its kind that focuses on a critical perspective of the digital economy. You can learn at your convenience from a distance with a top 10 UK university, one known internationally for its world-leading research.
Could you help organisations harness the power of the digital economy? Our MSc Digital Economies explores the ways in which digital technologies can transform businesses, economies, and the world at large:
