The financial sector is constantly innovating and finding ways to use technology to better optimise its processes and services.
Digital banks and FinTech are some of the upcoming financial institutions with pools of innovative efforts under their wing. The challenge for traditional structures such as central banks is to continue ensuring that its services meet customer demands while also embracing innovation.
We had the opportunity to interview Sam Allen, Manager, Digital Strategy (CTO), Reserve Bank of New Zealand (RBNZ), to understand more the processes and decisions behind this drive.
As New Zealand’s central bank, RBNZ is responsible for setting monetary policy to maintain price stability and promoting the maintenance of a sound and efficient financial system.
Sam is directly responsible for setting the technology direction of the organisation and ensuring a well-planned approach for its delivery.
His role includes executing the data strategy, to see RBNZ become the first central bank with its core data and analytics capability being public cloud based.
Prior to this he worked with HSBC on their global digital transformation program, moving from a bricks and mortar to digital bank and Credit Suisse building their Rates business global trading system.
Banks on Cloud Services
Just like many other organisations, RBNZ employs cloud computing for storing data and for conducting data analysis. Sam shared his views on the main benefits of it:
1. Efficiency through micro-level cost management
2. Data Security
3. On-demand / Immediate scalability for storage or compute
5. Disaster recovery
6. Lowering the cost of curiosity
“Cloud supported data platforms are no silver bullet,” said Sam. He explained that the benefits brought with cloud technology could act as a double-edged sword, bringing about high-risk areas to an organisation.
It is imperative that cloud platforms are executed and managed well to avoid losses such as in the cases of data breaches. If maintained well, organisations can realise the benefits associated with on-demand storage and scalable computing power.
When moving data storage and analysis services capabilities to a cloud vendor, organisations need to note cloud providers generally only offer a platform. The onus remains on the businesses to invest more heavily in internal skillsets related to tool integration and platform management, rather than building and supporting the more common in-house application. There are options to negate this, such as buying managed analytics capabilities.
An insight-driven business means better customer relationships, a more seamless customer experience, better and faster product iteration, and a focus on actionable data.
More data does not mean more useful insights; knowing how to use that data effectively is where the skill lies. Understanding the data at hand provides the ability to derive valuable insights and trends. In the case of a central bank, it will aid in monetary policy setting and more efficient supervision and governance.
This doesn’t mean that those don’t exist without a cloud data platform. It is the cost/benefit realisation differential when looking at the scale of data access, compute and tooling to generate those insights in a timely actionable manner at scale, while balancing security and costs changes the operating model and corporate decision-making processes.
Sam acknowledged that privacy and security are common concerns across all organisations. As a central bank, RBNZ relies more on the reputational costs of data loss.
As with most New Zealand government agencies, RBNZ is subject to the Official Information Act (OIA). The OIA provisions for members of the public to request access to any non-sensitive data held by a government agency. This puts RBNZ in a unique position.
Sam said that the bank does not hold personably identifiable information (PII) and most of the data is rolled up to a higher level. This provides a level of obfuscation which means that even if they did lose data to a breach, it isn’t that useful to hackers looking for saleable or leverageable data.
The way in which RBNZ has approached cloud to store data also provides a barrier and assurance. RBNZ does not hold their systems of record on public cloud. As careful custodians of their data sources, RBNZ only shifts into the public cloud data that is required to support their analytics capabilities. Sam added that reducing possible exposure breadth whilst maintaining usability is paramount.
He said there’s lot of time and money being spent to ensure that the Bank has strong privacy and security controls across every aspect of its platform. It is a priority to ensure that it is being the best custodian of information.
Actions for mitigating risks surrounding privacy and security
A lot of time is invested into looking at the Bank’s architecture, the tooling along with the data being used. Together they form the view on how much review time is needed. The riskier the data, or open the tooling, the greater the need for more scrutiny and time spent on assurance. Sam shared that the Bank’s initial architecture for a data analytics platform had Athena as the query tool. It was quick, cheap, well-supported and seemed ideal for integration for end users.
They realised when implementing the solution that Athena’s private endpoints could not be locked down. This led them to find a secure solution which ensured the same outcome. In changing technologies, they increased operating costs by up to 10x.
Sam stressed the importance of having the right people ask the right questions and being bold enough to challenge assumptions, in order to mitigate risks in an ongoing basis. He shared that the business was happy to support this cost uplift as it assured a higher security model.
RBNZ’s platform has internal security reviews, external pen tests, and also has had security and architectural reviews by reputable agencies. The components and setup were shared among trusted government agencies to get peer review on selection choices.
Strong management of the AWS NACLS, ensuring encryption in transit and at rest, closely managing firewall rules, consolidating virtual private clouds and ensuring active monitoring across the platform are but a few of the risk mitigants RBNZ employ.
“No doubt, it is an ongoing and evolving area that needs constant attention,” said Sam. “As technology and services change, so do their potential holes and risks.”
He stressed that RBNZ does not only carry risks but also the impact of being the first central bank to deliver at scale a data and analytics platform in public cloud.
“If we get it right, it sets a strong precedent as a model others can follow,” he added.
Technologies employed for optimising processes/improving customer experiences
People were stressed as the most important form of technology for improving customer experience. Sam said that without a doubt, humans are a unique technology that can never be lost to improving customer experience.
With automated collection tooling, CRMs or interactive applications, he said that their most powerful tool is still the interactions RBNZ staff have with the financial industry.
FinTech and banks
Sam defined FinTech as “simply a technology used to support or enable banking and financial services”.
“Fintech 1.0 is believed to be from 1886. An era when we first started talking about financial globalization. It began with technological advancements such as the telegraph, which enabled the rapid transmission of financial information across borders for the first time,” he added.
Technology today enables fast communication and automated decision making while continuing to support and expand capabilities of all financial institutions. Real-time processing of transactions, blockchain-enabled contracts or immediate card blocking via a smartphone app are some of such capabilities.
Technology underpins the growth of banks and their capabilities, improving engagement both within their walls and externally with customers and fellow regulators.
At RBNZ, Sam said that robust technology systems underpin how the bank is maintaining New Zealand’s monetary system sound, efficient and dynamic. Newer technologies offer opportunities for increasing their effectiveness as a central bank.
RBNZ utilises a lot of datasets to help inform and manage its operations. It leverages on Fintech capabilities, such as cloud technologies to support its capability growth, which has allowed them to increase their compute and storage to uplift data analytics and improve their capability to assure New Zealand’s fiscal economy.
“We’re interested in game-changers to keep us ahead of potential disruption and we are always looking to improve how we can best serve New Zealand through our day-to-day operations,” he said.
Without a doubt, the adoption of FinTech improves competition in the marketplace, ensuring more extensive opportunities for customers to get better potential outcomes from their current institutions. It is not how ever a wholesale replacement of banks on the high street.
Sam said that some large banks have doubled down on technology-lead customer interactions, on the premise of it being quicker, cheaper per engagement and more convenient.
He stressed that successful banks are not being replaced by FinTech, instead they find the best medium of human and non-human interactions to offer the right engagement to their customers. Building a brand and successful business model through increasing their branches and human engagement, while also employing FinTech to ensure a great customer, technology, experience seems to be a winning model.
Future tech and innovation plans of RBNZ
“We are at a pivotal point in the history of the Reserve Bank of New Zealand,” said Sam. The Bank is undergoing significant changes – both culturally as an institution and with the government’s expectations of their performance as a central bank. They continue to build their capability to respond to, lead and influence their rapidly changing environment.
In its latest Statement of Intent (SOI), RBNZ set out its vision to being a Great Team and the Best Central Bank. To get there, RBNZ recognises it needs to review the way it operates, engages and delivers its core responsibilities.
This includes operating to the extent of its legislative mandate, taking a long-term view on all policy work, embracing innovation and inclusiveness, and being influential on the broader challenges that affect the people of New Zealand.
Its core mandate, enshrined in its statute, is to promote the prosperity and wellbeing of New Zealanders, and contribute to a sustainable and productive economy.
In line with this, Sam shared that the Bank has just completed its future state architecture review which has produced promising outlook. Improved digital workspace capabilities to engage with the public and those under supervision are to be implemented as well.
The Bank intends to have a richer tracking of the New Zealand dollar throughout the economy and enable cloud-based modelling to better forecast the impact of climate change on the key factors driving the economy.
It also aims to lower the cost of curiosity with the data and models it holds through enabling community access to the Bank’s data analytics platform and so much more.
Sam enforced on the importance of innovation for the bank, “Technology is a strong investment area, which will continue to grow the capability of the bank and enable us to do more for New Zealanders.”
China Provincial Development and Reform Commission announced the list of the second batch of digital transformation promotion centres in Liaoning Province. There are 13 additional provincial-level digital transformation promotion centres to help small and medium-sized enterprises improve transformation capabilities, reduce transformation costs, and shorten transformation cycles. There are currently 29 digital transformation promotion centres in the province, in addition to the previously announced first batch of lists.
The centres will assist the government in promoting digital construction in Liaoning and cultivating a digital transformation ecology. The programme is under the construction of the second batch of digital transformation promotion centres in Liaoning Province according to the Provincial Development and Reform Commission. The listed enterprises in this programme are based on self-declaration and recommendations from provincial and municipal departments. Experts then review the voluntary requests before being finalised and publicised.
According to the Provincial Development and Reform Commission, the digital transformation promotion centre should fully integrate resources to assist small and medium-sized enterprises.
The province government will provide transformation tools, products, technologies, and customised solutions to support business digital transformation and development. The centre promotes traditional businesses, internet platform enterprises, industry platform enterprises and financial institutions.
The government also promotes collaborative innovation in industries, education, medical care, employment, elderly care, and other fields. Companies participating in the programme will use the projects as a starting point to develop digital technology application scenarios. Participants in the programme are also permitted to complete personnel training with universities and colleges and vocational training and education.
The Provincial Development and Reform Commission will regularly evaluate provincial-level digital transformation promotion centres. The results will be used to recommend applicants for national-level digital transformation promotion centres.
China is currently driving the country’s digital economy. In early November, the General Office of the Ministry of Industry and Information Technology issued the “Guidelines for the Digital Transformation of SMEs.” The regulation aims to fully implement the Party Central Committee’s and State Council’s decision-making deployment to encourage SMEs to improve their overall strength and core competitiveness through digital transformation.
The General Secretary of the Communist Party of China, Xi Jinping, stated that “small and medium-sized enterprises can do great things.” He also emphasised the importance of grasping the direction of digitisation, networking, and intelligence. Moreover, promoting the digitisation of manufacturing, service industries, agriculture, and other industries is also necessary.
The guidelines aim to implement Party Central Committee and State Council decision-making and deployment, strengthen policy coordination, strengthen scientific guidance, deepen transformation awareness, and gather work synergy. The report also needed to promote high-quality economic development through the digital transformation of small and medium-sized businesses. The effort also had to be consistent with the overall economic and social digital transformation trend.
Furthermore, China will use the guidance to increase specialisation and new development of small and medium-sized businesses. The government intends to expand the use of digital technology in various sectors, including research, production, supply, marketing, and clothing. They plan to empower and refine products, increase value, plus accelerate technological innovation and new development in small and medium-sized businesses.
Another role of guidance is strengthening the digital transformation system and the comprehensive path of small and medium-sized businesses. Digital transformation is a multifaceted, cross-cutting project. The guidelines thus aid transformation from the demand side, the supply side, and local governments at all levels. All interested parties can use the guidelines to clarify their positioning and path and strengthen the collective force of transformation.
Stakeholders in the payments industry were challenged to step up their technological advancement. The appeal was issued as a government effort to ensure that the country stays current in advancing the money and payments landscape.
“My overarching message is that we all work and live in a period of substantive change. (The change) offers enormous opportunity if embraced, but potentially greater risk if not,” Karen Silk, Assistant Governor of the Reserve Bank of New Zealand – Te Ptea Matua, said at a conference in Auckland.
Silk emphasised the technological improvement needed because New Zealand does not yet have scalable electronic, instant, peer-to-peer payments and lacks real-time retail payment systems. She also encouraged speeding up the fintech developments in the country. She noted that the country could become more digitally competitive by nurturing home-grown fintech enterprises.
The government has recognised the importance of increasing domestic competition and efficiency savings in the payment space and the broader financial system. However, lingering reliance on legacy systems, failure to understand regulatory impetus and focus, and limitations in cohesion and provision of regulatory support for innovation are impeding real progress.
Nevertheless, Silk praised recent legislative changes. Financial regulators provide a one-stop shop for fintech firms and system-level work to improve cross-border payments. The positive movement makes domestic interbank payments available seven days a week.
Silk stated that challenges could arise from new players who “inadvertently” introduce design or technology risks. She called it a risk as the nature of the business avoiding New Zealand regulation or undermining the role of central bank money, whether cash or a possible Central Bank Digital Currency (CBDC). Even though the Reserve Bank is still researching the CBDC.
The Reserve Bank of New Zealand published a paper recently describing the current state of the country’s payments system. It will issue another next month, consulting on the potential need to regulate private crypto assets until March 2023.
The Reserve Bank remains committed to improving the cash system’s efficiency and resilience to ensure that it continued providing payment options for everyone and financial and social inclusion for those who rely on it, Silk said. Next year, the Bank has planned small live experiments to investigate various ways to expand merchants’ roles in the cash system.
This could include assisting merchants in recycling cash at the point of sale; compensating them for cash-out services; facilitating frequent, affordable cash delivery and collection for merchants; and consolidating the cash system through the creation of utility entities, Silk explained.
Payments represent the flow of money. Sooner or later, the global payment evolution will also impact New Zealand. Hence, the country demands better, smarter, and faster payment. As a result, the study of payments has come under scrutiny.
Only some understand the intricacies of New Zealand payments, and because they are complex and interconnected, creating a single view of the payments landscape takes time and effort. Furthermore, payment systems and services differ from country to country.
The Reserve Bank plays a multifaceted role in the payment landscape. The bank runs, participates in, regulates, and monitors core payment systems. It has also recently taken on the part of money steward in New Zealand. In addition, it is interested in supporting and ensuring that money and payment systems are efficient and reliable and supporting innovation and inclusion.
Indonesia has great ambitions for its digital economy and has deployed strategies to achieve its ambitions with a goal to reach USD315 billion by 2030. The 2021-2024 Indonesia Digital Roadmap is set on 4 pillars, namely digital infrastructure, digital government, digital economy and digital society.
As part of its strategy, the government is promoting four important digital skills to accelerate its digital economy. The government believes that the future demand for digital skills will be focused on four areas Artificial Intelligence, Bitcoin, Cloud Computing, and Data Analytics (ABCD). The ABCD skills are projected to help the national economy hit its US$315 billion by 2030 target.
Therefore, the Indonesian government is encouraging young people to start businesses through a variety of free programs such as Beta School, 1,000 Startup Movement, Startup Studio, HUB.ID and IGDX.
“Aside from university disciplines, the ABCD is becoming increasingly important for everyone. I believe that all young people require ABCD,” stated Dedy Permadi, Expert Staff of the Minister of Communication and Informatics, in a discussion forum.
Mastering ABCD technical hard skills apart, Indonesian digital talents are also expected to be proficient in non-technical or soft skills known as the 4C’s, which are Complex Problem Solving, Critical Thinking, Creativity and Communication.
The Director of SDPPI Kominfo, Ismail, expressed his hope that the young generation in Indonesia would capture the golden opportunity for digitalisation. Digitalisation will transform Indonesia from a consumer country to a prominent player in the new normal.
The government recognises the importance of good infrastructure support in boosting the digital economy. As a result, the government is working to ensure an equitable distribution of internet connection networks across Indonesia, particularly in frontier, remote, and underdeveloped (3T) areas.
According to Ismail, the development of ICT infrastructure must meet three criteria: broad coverage, the deployment of a fibre-optic cable network on the backbone, and affordability, which means that the price is reasonable for the community.
Private operators focus on developing infrastructure in high-demand urban areas and, as a result, the digital divide between cities and towns has grown wider. Consequently, the government is beginning to develop 3T telecommunications in rural, underserved areas.
“We cannot rely solely on private-sector investment. To speed up and accelerate digital transformation, the government must invest in infrastructure,” Ismail said emphatically.
The Ministry of Communication and Information Agency and Telecommunications and Information Accessibility (BAKTI) have also worked to improve and expand internet access for public services throughout Indonesia. BAKTI is working with telecommunications companies to build Base Transceiver Stations (BTS) in remote areas of Indonesia.
“We hope to finish building BTS in all remote areas by 2023 and connect them to the 4G network,” Deddy stated.
Indonesia is a vast archipelagic country. So, relying solely on fibre optic cable networks will make it difficult to provide connectivity. As a result, the government is combining the fibre optic cable network constructed with the 150 Gbps SATRIA 1 satellite.
This multifunctional satellite can provide internet access to 150,000 public service locations in Indonesia, including educational institutions, local governments, defence and security administration, and health facilities. This satellite is scheduled to launch in 2023.
The government has begun construction of the first National Data Centre in the Delta Mas Region, GIIC, Cikarang District, Bekasi Regency, West Java Province, in connection with its digital strategy. It will then gradually expand data centres in Nongsa Digital Park in Batam, Riau Archipelago, the new National Capital City (IKN) in Balikpapan, East Kalimantan, and Labuan Bajo, East Nusa Tenggara.
The creation of this government data centre is intended to promote efficiency, effectiveness, state data sovereignty, and national data consolidation as part of the One Data Indonesia initiative. “This (data centre) is critical because government data management is critical to developing society’s transformation into a digital society,” Deddy said.
The National Single Window System (NSWS) currently accepts applications for 248 government-to-business (G3B) clearances from 26 central ministries and departments, in addition to state-level clearances in 16 states and union territories.
The portal is rapidly gaining traction among the investor community and as of date has over 370,000 unique visitors. Since its launch last year, more than 44,000 approvals have been facilitated on the portal and over 28,000 approvals are currently under process. Over time, the portal will onboard more approvals and licenses, based on user and industry feedback. According to a press release, the government is committed to reforming the system, making it a more conducive environment for business and investment.
In 2021, NSWS was soft-launched to all stakeholders and the public by the Union Minister of Commerce and Industry, Piyush Goyal. NSWS was created by the Department for Promotion of Industry and Internal Trade (DPIIT), following the government’s decision to create an Investment Clearance Cell (ICC). NSWS is a single platform that allows investors, entrepreneurs, and businesses to identify, apply for, track, and obtain approvals and clearances.
The system aims to reduce duplicities in information submission and compliance burden and promote sector-specific reforms and schemes. It reduces the gestation period of projects and strives to promote the ease of starting and doing business.
The release informed that the Know Your Approvals (KYA) service is live on NSWS with 544 approvals across 32 central ministries and departments and 2,895 approvals across 30 states and union territories. A total of 3,439 approvals are listed. A total of 132,510 investors have used the KYA module to find out the type of approvals they need for their businesses. 26 ministries and departments were onboarded with 248 approvals live. The 16 states and union territories onboarded on the platform are Andhra Pradesh, Bihar, Goa, Gujarat, Himachal Pradesh, Jammu and Kashmir, Karnataka, Madhya Pradesh, Maharashtra, Nagaland, Odisha, Punjab, Tamil Nadu, Telangana, Uttar Pradesh and Uttarakhand.
The teams are working to integrate five more states by 15 December, namely Haryana, Andaman Nicobar, Tripura, Jharkhand, and Arunachal Pradesh. To date, a total of 71,000 approvals have been applied on the portal. The system has recorded visitors from 157 countries, including the United States, the United Kingdom, and the United Arab Emirates. The release said that the remaining eight ministries and departments will be onboarded by the end of the year.
A review of the progress and status of NSWS is set to happen on 5 December with ministries, states, union territories, and industry representatives. In this regard, preparatory meetings have been held to discuss the integration status of various regions and departments. These meetings have witnessed active participation from the stakeholders, the release noted. DPIIT and Invest India have been proactively holding regular reviews with the ministries, states, and industry associations in the process of setting up the NSWS to ensure an inclusive approach to evolving the national portal. Over 150 participants from states and ministries have participated in the review meetings.
The Hong Kong Science and Technology Parks Corporation (HKSTP) affirmed its strategic co-incubation partnership with a Canada-focused venture capital firm to identify promising international start-ups seeking to expand their innovation journey to Hong Kong, into the GBA and beyond.
With a proven track record in life science start-ups, the VC firm will work with HKSTP to build an inbound stream of early and mid-stage ventures. The co-incubation programme aims to bring several strong-performing ventures to Hong Kong with a focus on biotech, but also on other deep-tech areas such as ESG, advanced materials, edutech and AI.
To date, as Hong Kong’s largest technological ecosystem, HKSTP has helped accelerate growth for hundreds of outstanding start-ups, raising over HK$80.2 billion in total funding in the past five years. During the 2021-2022 fiscal year, the total valuation of HKSTP’s acceleration programme start-ups grew over 250% while total investment funds raised have also doubled.
The partnership with the VC firm is the most recent of HKSTP’s series of strategic co-incubation programmes with global market leaders in the industry, investment, R&D and academia, which further elevate Hong Kong’s innovation and technology (I&T) ecosystem strength as a global springboard to success.
Riding on Hong Kong’s thriving biotech market and the city’s status as the world’s second-largest biotech fundraising hub, the co-incubation partnership also recognises HKSTP’s impact and success in building a vibrant biotech ecosystem in Hong Kong.
The Head of Incubation and Acceleration Programmes at HKSTP stated that the co-incubation partnership with an international player like the partnering firm validates Hong Kong’s unique and growing status as a global I&T hub helping international start-ups go beyond borders in their global growth journey.
She noted that with a pipeline of seed stage and series A start-up’s already in place, this proves the strength of the HKSTP innovation ecosystem and confirms that Hong Kong is open again for global business and an ideal launchpad for high-growth tech ventures seeking GBA, regional and global expansion.
The Managing Partner of the VC firm stated that the signing of this co-incubation agreement will allow the two parties to incubate and introduce promising global start-ups to scale their businesses in Asia. The firm will continue to leverage its unique cross-pacific networks and investment niches in transformative life science technologies to enrich Hong Kong’s innovation ecosystem with more ground-breaking technologies from North American start-ups.
The programme features co-incubation activities ranging from business development, consulting and training to mentoring sessions for qualified overseas start-ups. Participating entrepreneurs will also create proofs-of-concept and pilot initiatives.
The start-ups will tap into the investment and international business network reach of the firm while also formally joining the HKSTP innovation ecosystem to access product validation, commercialisation and go-to-market expertise from HKSTP and its wider network of partners.
Specialising in investing globally in science and technology-based start-ups, the VC firm has been active in Hong Kong and Asia with its specific focus on nurturing start-ups that aspire to expand to China and Asia. In 2019 it facilitated eight Canadian start-ups from prestigious start-up programmes to come to Hong Kong to gain deeper insights into strategic landing tactics and expansion into the Asian markets. This latest partnership with HKSTP has forged a new level of commitment to the Hong Kong I&T ecosystem.
Around 30,000 rural homes and communities will soon have access to faster and improved connectivity with an expansion of the Rural Capacity Upgrade programme. 21 new contracts have been signed by Crown Infrastructure partners to accelerate upgrades to towers and broadband connections in areas with poor coverage.
The announcement was made by the Minister for Rural Communities, Damien O’Connor, and the Minister for the Digital Economy and Communications, David Clark. This round of the Rural Capacity Upgrade will see many existing towers upgraded and new connections established in rural areas experiencing poor performance. Areas that will benefit from these improvements include, but are not limited to, settlements in the Far North, Gisborne, the Manawatu-Whanganui region, Taranaki, Southland, and Waikato.
The project is expected to significantly boost the economic productivity of homes and businesses with a slow, unreliable, or unusable connection, Clark noted. The government is committed to improving rural connectivity and is on track to see 99.8% of New Zealanders receive access to improved broadband because of the Ultra-Fast Broadband rollout, Rural Broadband Initiative, the Marae Digital Connectivity programme, and the Mobile Black Spot Fund by the end of 2023, he explained.
The investment in rural connectivity will work alongside Land Information NZ’s rollout of the Southern Positioning Augmentation Network (SouthPAN) service. As OpenGov Asia had reported earlier, SouthPAN is the Southern Hemisphere’s first satellite navigation augmentation service. It will improve the availability and accuracy of positioning, taking it from 5-10 metres to as little as 10 centimetres across the country.
This will boost rural productivity through precision agriculture and horticulture, fenceless farming, and improve the safety of search and rescue in the backcountry. The government, along with private sector contributions, has invested more than $2.5 billion into improving digital connectivity to date.
The government has also released “Lifting Connectivity in Aotearoa”, which sets out the high-level connectivity vision for New Zealand over the next decade. This includes the goal that all New Zealanders have access to high-speed connectivity networks, and that the country is in the top 20% of nations with respect to international connectivity measures.
Last month, the government launched the Remote Users Scheme to provide broadband and connect New Zealand’s most remote communities. Clark had announced the scheme, noting that it would equip as many remote households as possible with the connectivity infrastructure needed to access broadband services. As reported on OpenGov Asia, the Remote Users Scheme will help connect people to online health services and educational tools. Through Budget 2022, $15 million was allocated towards funding the scheme, as part of the broader $60 million rural connectivity package announced earlier in the year.
The Crown Infrastructure Partners (CIP), which was established by the government, will administer the Remote Users Scheme and is calling for applications from potentially eligible households and communities. A request for proposal from Internet service providers will follow. It is expected that new broadband connectivity infrastructure for the eligible areas and households can begin being built in mid-2023.
Dr Andrew Lensen from the School of Engineering and Computer Science and Dr Marcin Betkier from the Law School are eager to ensure AI has a significant role in the justice system. The researchers based in New Zealand built an Artificial Intelligence (AI) algorithm that predicts the length of court sentences.
But the question that may arise is whether the AI algorithm is fair enough to hand down the sentences. In the current justice system, society trusts judges to hand down fair sentences to the accused based on their knowledge and experience.
But how about AI? Can it judge better because it can eliminate the potential for bias and discrimination? And can AI substitute the judge’s knowledge and experience with its ability to analyse and predict large amounts of data?
Dr Andrew is optimistic that AI can help better sentencing performance in the court. The confidence comes from the use of AI to predict some criminal behaviour, such as financial fraud. Even though he has not tested the algorithm model in the courtroom to deliver sentences, he is confident in his idea that AI can have a role in the sentencing process.
Dr Andrew says when judges handle a case in the court, they have some “inconsistency” when passing a sentence for a convicted criminal. The inconsistency comes from a judge’s consideration of individual circumstances, societal norms and the sense of justice.
The moral decision and the sense of humanity are based on their experience and even sometimes change the law. Each judge uses their prudence in deciding the outcome of a case. Another “undesirable inconsistency” occurs as bias or even extraneous factors like hunger. Research in Israeli courts has shown that the percentage of favourable decisions drops to nearly zero before lunch.
Judges must ensure similar offences should receive similar penalties in different courts with different judges. Usually, to enhance sentence consistency, the justice system has prepared guidelines as a reference. This inconsistency area is the pain point where AI can help.
How AI Helps Judges
Most modern AI is machine learning, a machine learning algorithm that could learn the patterns in a database to predict patterns and outcomes. Therefore, AI can provide better sentence suggestions after the computer algorithm learns the patterns within a set of data.
Dr Andrew’s machine learning algorithm trained with 302 New Zealand assault cases. The sentences in those cases are between 0 and 14.5 years of imprisonment. The model quantifies sentences based on certain phrases and terms when calculating the sentence. Then the algorithm built a model that can predict the length of a sentence for a new case and explain why it made certain predictions.
The relatively simple model worked quite well within the average error of the model in under 12 months. The model associates the words or phrases such as “sexual”, “young person”, “taxi” and “firearm” with longer sentences. While shorter sentences were given to cases with words like “professional”, “career”, “fire” and “Facebook”.
Beyond Decision Making
In the future, AI could be used as an evaluation tool for judges. They could understand better their sentencing decisions and perhaps remove extraneous factors. The models also have the potential to be used by lawyers, providers of legal technology and researchers, to analyse the sentencing and justice system. Moreover, AI also can be used for controversial sentences and help create some transparency around controversial decisions.
Of course, the use of AI in the justice system may still be controversial. Most people are still keen that the final assessments and decisions on justice and punishment should be made by human experts. But maybe it is the right time need to give an opportunity to an “algorithm” or “AI” in the judicial system for the common good.
New Zealand is not the only country that explores the use of Artificial Intelligence (AI) in courtrooms. Several other countries like China and Malaysia have done similar things. In China, robot judges can decide on a small case. While in Malaysia, some courts have used AI to recommend sentences for offences such as drug possession.