Research

Advance of the Automations

Increasingly 'intelligent' robots could revolutionise the workforce and boost productivity, while opening up new investment opportunities across the disruptive technologies sector.

“Fast-moving companies worldwide are establishing entirely new product and service hybrids that disrupt their own markets and generate fresh revenue streams.” - Australian Disruptive Technologies report, Australian Trade and Investment Commission, 2017.

A revolution is taking place that has the potential to transform every aspect of our lives.

Across the globe and domestically, disruptive innovations like Robotic Process Automation (“RPA”) are gradually bringing a futuristic vision to life. It’s a new version of reality, where robots tackle large scale logistical problems faster than any human could, and intelligent machines learn and understand the subtleties of human communication.

For those who believe in the future of that reality, and its potential to facilitate new avenues of growth and prosperity, it’s also proving to be an interesting investment choice.

The increasing use of RPA is a trend Morgan Stanley is following, referencing it in a recent research report as “a game-changer for the way company processes are executed.” 1

Investing in a disrupted future

Morgan Stanley has an exclusive distribution agreement with Nikko Asset Management and Ark Investment Management (“Ark Invest”), a company that seeks to “capture long-term outperformance and capital appreciation created by disruptive innovation.”

The agreement allows Morgan Stanley to provide its clients with unique opportunities to invest in baskets of stocks with a focus on disruptive innovation themes.

Catherine Wood is the Founder and Chief Executive Officer/Chief Investment Officer of ARK Invest.

Early in her career, Catherine was exposed to fledgling versions of different technologies that went on to change the world and claim prominent portions of today’s global markets.

She said she was able to identify those emerging opportunities, and sees similar potential in today’s disruptive innovations.

“Database publishing was going to become the internet, and I knew that wireless technology wasn’t going to stay brick-sized,” Catherine said.

“Those areas were all underestimated opportunities at the time.”

Ark Invest has predicted that Deep Learning – a term used to categorise the processes and technology underlying cognitive-enhanced RPA – will grow to become a $17Trillion industry within two decades.

“The Deep Learning world is moving very quickly,” Catherine said.

For more information on opportunities for investing in disruptive technology contact your Morgan Stanley Financial Adviser.

What is RPA and why is it important?

RPA is a piece of software often referred to as a robot. It sits 'on top' of systems, taking information from one and feeding it into others – work that is currently performed by humans.

Cognitive enhanced RPA is a further advancement that allows the robots to perform more complex tasks, such as learning from mistakes and ascertaining key meanings, and even sentiments, contained in written language.

Morgan Stanley Research reports that adoption of RPA technology is growing exponentially, driven by very compelling economics: one RPA robot can do the work of three to five workers (one provider suggests this could be as high as 15 working on a fully-utilised basis). Most industry players estimate the level of cost savings, based on full time equivalent (FTEs) time, is 10-25%, which can rise to 30-50% with cognitive enhanced RPA. Proof of concept can take 3-6 weeks, deployment 3-4 months and the return on investment (RoI) can be just 3 months.

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