Previously published on January 27, 2023 in
By Milton Ezrati, Chief Economist at Vested
These days, the word “tech” typically brings to mind the internet, apps, and social media. It’s only reasonable. These aspects of technology have come to dominate daily life for many. But technology is a whole lot broader than social media or even the internet, and it’s poised to revolutionize how the entire economy works.
The best way to anticipate where the change will occur is to consider those areas of economic life that cry out for technological solutions. The need for more resilient supply chains, for example, will demand data sharing, constant communication, and coordination, things that cloud computing offers. Opportunities in fintech are another, especially in insurance, where fewer inroads have been made to date.
The health care field, which needs to provide critical services more effectively and cheaply, looks like another area in which tech can provide answers and accordingly make gains. There’s also every reason to believe that tech will play a role in helping the economy cope with an aging population and with today’s great anxiety: climate change. The picture is far from clear. The future never is. But outlines are visible.
This first part of a two-part series on the future of tech will take up data needs, communication, fintech, and health care. The next article will take up matters of the aging population and climate change.
Cloud computing and 5G networks lie at the center of much of this. One will create more reliable internet access, while the other will introduce greater flexibility and access to cutting-edge applications. Until recently, firms relied on in-house software for their production, distribution, and accounting needs. With reliable cloud computing, however, they can access continuously updated applications more cheaply. The “cloud” should also ease the impediments that in-house software imposes on the need for easy communication, data sharing, and coordination. All will provide the flexibility needed to establish more resilient supply chains, for example, a need that became painfully clear during the pandemic and its initial recovery period.
Building 5G wireless networks will require a considerable investment. For cloud computing to offer the advantages it promises, it will need to invest heavily in cyber protections and upgrade them constantly. Otherwise, its answers will too readily expose its users to privacy incursions, theft, and other disruptions. These outlays will strain finances. The expense will undoubtedly lead to fewer, larger providers than presently exist. But business needs are so great, and the potential returns so large that those involved will manage these vast outlays.
On the financial side of the economy, algorithm-based solutions have already invaded investing and lending. This so-called “fintech” revolution has offered investors new ways to use their assets and manage risk. It has streamlined lending decisions and helped borrowers find where they’re most likely to secure credit. Prior to the tech invasion, much of this was left to happenstance, luck, or protracted searches.
Now, this kind of revolution is poised to occur with insurance. Dubbed “insurtech,” this technological push will—as in investing, banking, and lending—broaden access, manage risk more effectively and efficiently, and streamline processes that today can take an extended time. As in banking and lending, this technological push will bring joint ventures between established firms and tech startups.
Health care is an area that truly cries out for technological assistance and accordingly offers tremendous opportunities. Rising medical costs threaten just about every developed economy on Earth. Many nations, especially those with broad public health care systems, rely on triage and rationing to hold down costs. These unpleasant options make for a powerful public demand for another solution. Tech strengths, once focused, can play a big role in bringing those preferred alternatives to life.
The communication abilities of technology can, for example, help with both preventative care and monitoring patients with chronic problems and do so in more effective and cost-efficient ways than presently. Algorithms can save doctors time and attention by offering preliminary diagnoses and broadening the field in which nurse practitioners can operate. Still, more imaginative answers will emerge in time. No doubt, some of this aid will require legal changes. And since much will depend on cloud computing, the need for good cyber protections will be essential to protect privacy. But the opportunities should ensure that those involved attend to these needs.
This is only an outline of the needs and how technology can respond, but it should give an idea of where things are going. The next article will take up tech’s role in the still more complicated areas of demographics, especially the growing proportion of older people in the population and in answering the multifaceted needs of climate change.