What: McKinsey discusses the potential economic benefits and impacts of generative artificial intelligence technology on various industries and work activities.

Why is it important:  Generative AI has the potential to add trillions of dollars in value to the global economy.

Generative AI has proven to be able to add value to the global economy in a number of use cases. The technology promises to boost labour productivity by 0.1% to 0.6% per year and could add USD 2.6tn to USD 4.4tn in economic benefits. Generative AI can also improve customer experiences, provide virtual experts to augment employee performance, streamline content generation, and accelerate drug development processes. With its capabilities, generative AI has the potential to significantly impact a number of sectors, especially banking, high-tech, retail, and life sciences.

In terms of generative AI’s impact on the retail sector, it has the potential to increase productivity by 1.2 to 2.0 % of annual revenues, equating to an additional USD 400bn to USD 600bn. Here is how it can enhance the sector:

-    Automate key functions such as customer service, marketing and sales, and inventory and supply chain management to streamline processes

-    Create applications that give shoppers a next-gen experience that can give shoppers a personalized interface

-    Facilitate copywriting for marketing and sales and brainstorm marketing ideas

-    Accelerate content analysis and creation for increased brand awareness and conversion rates

-    Enhance the process of developing new versions of products by creating new designs rapidly

No matter the benefits, there is still a lot of caution that needs to be taken as sectors begin to adopt generative AI. Companies need to be mindful of data constraints, regulation for different processes, type of end user, intended level of work automation, the need for quality control and explainability when integrating generative AI into operations. Generative AI may also negatively impact workforce transitions, security, reliability, organizational and social impacts, and environmental consequences. Therefore, there is a need to strategically keep humans in the loop and ensure security and privacy are top considerations of any implementation.

Overall, the time to act on generative AI is now, but stakeholders must act quickly to prepare for both of the challenges and opportunities presented by this technology as it has the potential to be both destabilizing and transformative at the same time.

The economic potential of generative AI