Leading economic growth through technological innovation. UBS set to capture opportunities for the fourth industrial revolution

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2 Dr. Axel Weber, Chairman, UBS Group AG Leading economic growth through technological innovation. UBS set to capture opportunities for the fourth industrial revolution The fourth industrial revolution is not simply a revolution in technology. Artificial intelligence, virtual reality, big data, cloud computing and 5G networking are all important components of this new revolution. Speaking at the UBS Disruptive Technology CEO Summit 2018 ( the Summit ), Dr. Axel Weber, Chairman of UBS Group AG, predicted that these technologies, acting as a whole, will fundamentally disrupt businesses and industries, generating an aggregated 12.8% average annual growth across segments involved and a projected turnover of US$1.1 trillion in Dr. Kai-Fu Lee, Chairman & CEO of Sinovation Ventures, concurred saying China is now leading the world in AI investments, capturing up to 48% of global venture capital in the AI segment. Moving from Copy to China to Copy from China, Dr. Lee believes this will increasingly be the case moving forward, attesting to how China is a force to be reckoned with in technological innovation. Dr. Kai-Fu Lee, Chairman & CEO, Sinovation Ventures From left to right: Jinjin Wang, Managing Director, TMT Head of China Investment Banking, UBSS / Dr. Aglaia Kong, Founder & CEO, Exaleap (ex CTO of Google)

3 The impact of AI extends beyond the technological realm Reshaping traditional industries through technological innovation In 2017, UBS Wealth Management published Shifting Asia - How artificial intelligence will transform Asia, revealing how artificial intelligence, or commonly known as AI, will impact Asian societies, businesses as well as economic and political decisions in profound and lasting ways. Sammy Cheung, Efinix s Founder, President & CEO, saw AI development as a way to speed up the growth of tech companies, Traditionally, time to market for tech development projects can take 10 to 15 years a significant investment whether it is in time or capital. It took us 15 years to shorten this process. Now, by combining AI with core technologies, we are able to shorten the development period to a matter of 3 to 5 years. However, the impact of AI extends beyond the technological realm. Sammy Cheung, Founder, President & CEO, Efinix UBS predicts that by the year 2030, AI will generate an economic value of US$1.8 trillion to US$3 trillion for Asia each year, consolidating its influence across financial services, medicine and health care, manufacturing, retail and transportation and already this influence is gradually emerging. On top of this, Edward Yu, President & CEO of Analysys, believed the edge to having a superior bandwidth is no longer relevant, given how competition is indeed everywhere. Every touch point for users interaction with products and services constitutes an experiential portal, where all it takes is one second for your customer to choose your competitor over you which is why success hinges on access and proper utilization of customer data. Speaking for the food industry at the Summit, Founder & CEO of Blue Horizon Roger Lienhard envisioned how a meat-free culture provides the perfect opportunity for application of innovative food technologies, where healthy substitutes of meat can be made from plant ingredients while reproducing the flavor, texture and nutritional value, promoting health and longevity. In the education sector, Kailei Zhang, Founder & CEO of Xuebajun, analyzed how less experienced teachers those who spent a mere 2 years on the job, for instance can be as effective as a veteran educator of 20 years by utilizing proper technologies, effectively realizing quality education for all. Derek Li, Founder & Chairman of Yixue Squirrel AI, also believed AI is the key to promoting quality education through student profiling, which tailors education strategies to individual needs. Jun Yang, Managing Director of Grand Flight Investment Management, believed the opportune moment for investing in education is now, as technological intervention combined with favorable policies will enable real growth in the education sector. Edward Yu, President & CEO, Analysys Roger Lienhard, Founder & CEO, Blue Horizon From left to right: Kailei Zhang, Founder & CEO, Xuebajun / Derek Li, Founder & Chairman, Yixue Squirrel AI / Jun Yang, Managing Director, Grand Flight Investment Management Thomas Deng, Managing Director, Chief Investment Office, UBS Global Wealth Management

4 The technology used in its battery module and power system will usher in a new era for public and passenger automobiles In talent acquisition, Jonathan Zhao, Founder & CEO of Kanzhun Technology Group found the emergence of AI the key to providing an N-dimensional individual during interview, versus assessing a two-dimensional candidate with his CV on paper. As technological innovation permeates through different industries, there exists greater possibilities for transformation across different industries. Jonathan Zhao, Founder & CEO, Kanzhun Technology Group Royce Hong, Co-Founder & CEO, XING Mobility Take commuting as an example, Royce Hong, Co-Founder & CEO of XING Mobility, cited the example of how his company has invented a fully electric supercar named Miss R which can go from 0 to 100km/h in just 1.8 second and performs equally well on both track and rough terrain. Royce stressed Miss R is not just a supercar designed purely for speed, but a development platform for the next generation of electric cars. He hopes that the technology used in its battery module and power system will usher in a new era for public and passenger automobiles, as well as agricultural and engineering vehicles, with application spanning both public and commercial transportation. Logistic-wise, Steven Lam, Co-Founder & CEO of GoGoVan, said he is both highly intrigued and optimistic about autonomousdriving, as it will drive down the costs for the logistics industry by at least 50%. The expansion of tech companies into the logistics sector worries him, as traditional logistics companies take a long time to evolve while changes happen overnight for tech companies. Faced with this boom in technological innovation, Steven Lam s plans for his company involve three parts: logistic infrastructure at the start; development of a digital platform as the next step; finally, adoption of tech such as AI and robotics. Another visionary of the logistics industry, Xiao Hua Chen, CEO of Daojia Group, has plans for innovating the logistics market. His three strategic goals involve addressing the current shortcomings of the logistic network, aiming to succeed where both Uber and Didi have failed; building a public transportation network for moving cargo for a city; and creating China s largest logistics network to be run on new energy. Xiaohua Chen, CEO, Daojia Group From left to right: Cat Rüst, Head of Innovation Technologies, Greater China, UBS Wealth Management / Steven Lam, Co-Founder & CEO, GoGoVan

5 AI has enormous potential From left to right: Jeremy Anderson, Member, Board of Directors, UBS Group AG / Dr. David Hanson, Founder & CEO, Hanson Robotics / Dr. Jean Nehme, Co-Founder, Digital Surgery In medicine, Doctor Jean Nehme, Co-Founder of Digital Surgery, introduced the audience to the company s latest innovation applying AI on surgical procedures worldwide and using this machine learned data to create a prediction system. Dong Xie, Founder & Chairman of Frontier Biotech, found great potential in key areas of medicine as technology advances: new ways to treating cancer, as well as promoting the efficacy of previously untreatable diseases such as AIDS. Are practical applications of AI possible for all industries, i.e. can they take advantage of this latest wave of technological innovation? Founder & CEO of 4Paradigm, Wenyuan Dai, believed two factors must be considered: first, whether sufficient value can be generated from the practical applications of AI in a certain sector to justify the application expenses; secondly, the cost of failure for AI in this sector is acceptable. AI has enormous potential, and if each sub-sector can benefit from, say, an eight-fold growth like that of Baidu, this will lead to exponential growth for the nation s GDP, and the AI bubble will not occur, said Dai. David Hanson, Founder & CEO of Hanson Robotics, believed the relationship between AI ethics and technology may well be beyond our imagination. The risks are very real but they should not be blown out of proportion, penalizing technological innovation. Wenyuan Dai, Founder & CEO, 4Paradigm From left to right: Anne Ma, Co-Founder & CEO, Shukun / Dr. Dong Xie, Founder & Chairman, Frontier Biotech

6 Dr. Kai-Fu Lee, Chairman & CEO, Sinovation Ventures Evolving from labor driven to AI driven From Copy to China to Copy from China Dr. Axel Weber recalled how he, as an economics professor, once taught students: cost is the key to revolutionizing an industry only when costs lower can new technologies be widely adopted. Now, as new technologies become more practical and affordable, industries are reaping the rewards. Dr. Kai-Fu Lee saw four waves of development in the AI era: intellectual transformation of the Internet; smart transformation of businesses; smart applications in the material realm; and full automation. For him, AI technology works in a different scenario in each wave, offering an increase of 10% or more in GDP with the potential to change the world in the coming 15 years. By Dr. Weber's reckoning, global annual turnover for the fintech sector will be up from US$120 billion in 2017 to US$265 billion by Tech investment will maintain its high-growth momentum, meaning that companies that succeed in riding the tailwind will continue to drive technological innovation. Meanwhile, the US no longer holds the monopoly on markets with lucrative development potential enabled by AI. Evolving from labor driven to AI driven, Dr. Kai-Fu Lee believed the world of AI and innovative tech is no longer dominated by the US but is, with China s presence, divided into two parallel routes of development. US is tech-driven while China is model-driven, with barriers in place to avoid bootlegging or price wars. Dr. Weber agreed. He found China to be the center of the tech revolution, mainly because it has the largest population of all nations and is, accordingly, one of the largest economic bodies in the world with its GDP and purchasing power. As the 4th industrial revolution kicks into high gear, China s sheer scale positions it optimally to benefit from this upcoming wave of development. China is also one of the world s most popular destinations for AI capital investments. In the AI field, 48% of the world s venture capital investments went to China while only 38% went to the US. From 2015 until now, venture capital from Sinovation Ventures alone helped create five unicorn startups. It only took two to four years for these five companies to achieve a total valuation of US$23 billion, said Dr. Lee.

7 UBS group is all set to take advantage of the industry tailwind Despite all the opportunities that China enjoys, Co-Founder of All-Stars Investment Dr. Richard Ji admitted while China runs only behind the US as the world s second largest market for investment, the majority of such capital goes to the industry winners. From the beginning of 2017 until now, the top-running 10% startups captured as much as 70% of the venture capital invested in the industry, making it difficult for the rest to keep afloat. Ke Wei, Partner of China Renaissance, also mentioned that as different startups continue to mushroom, a one-time win is not enough for today s tech companies. To succeed and continue to succeed, companies must keep on learning. Financial institutions are also actively strategizing to get the most out of these disruptive changes. Dr. Richard Ji, Co-Founder, All-Stars Investment Ping An Technology is also exploring a new development path of "technology enables finance - technology incubates ecology - ecology feeds finance". Ericson Chan, CEO of Ping An Technology, said Ping An has invested more than RMB50 billion in R&D. Based on innovative technologies including artificial intelligence, intelligent cognition, blockchain and Ping An Cloud in the past decade, applications covered more than 400 scenarios inside and outside the Group, forming five ecosystems including finance, healthcare, automobile, real estate and smart city. UBS group is all set to take advantage of the industry tailwind. As Dr. Weber outlined, the group s focus is in 5 key directions of tech development: artificial intelligence, virtual reality, big data, cloud computing and 5G network. He said, We continue to explore new technologies in all its forms, anticipate the needs of our customers and the capabilities required to satisfy their needs. This is why we have allocated a generous budget for technological research and development US$1 billion for the upcoming year. Ericson Chan, CEO, Ping An Technology UBS All rights reserved.