Hi-Tech 2024

BALANCING PROGRESS

GUIDE TO HI-TECH 2024

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24 Is Blockchain a Trust Machine?

BALANCING PROGRESS AND EU ALIGNMENT

Serbia’s digital transformation, which has been spearheaded by Ana Brnabić, has achieved remarkable progress, but still requires swift harmonisation with EU regulations to ensure the country’s future success and integration

From 2017 until early 2024, Serbia’s digital agenda was synonymous with the tenure of then Prime Minister Ana Brnabić. But with her now taking on the role of Speaker of the National Assembly of Serbia, a question arises as to where the epicentre of Serbia’s digital transformation will be located?

The progress achieved on digitalisation, particularly in establishing an institutional framework conducive to the growth of the start-up community, was undoubtedly both necessary and commendable. The Serbian start-up community and the number of innovative companies have today greatly surpassed the figures seen in 2017. For instance, Serbia’s ICT sector exports are projected to soar to a value of 10 billion euros ($10.9 billion) by 2027, representing a substantial increase from €3.5 billion in 2023 –with that 2023 total itself marking a tenfold surge compared to 2012.

The trajectory of progress is expected to persist, fuelled by ongoing endeavours in digital infrastructure development, prepa-

rations for the advance of artificial intelligence and plans to expand science and technology parks across various cities.

However, it is evident that Serbia still has much ground to cover when it comes to the overall institutional framework needed to swiftly align with European regulations governing digital spaces. Given the intricacy of digital infrastructure and the challenges of managing the entire digital ecosystem, embracing the EU model becomes an imperative for Serbian businesses to access foreign markets, while concurrently safeguarding our citizens in the digital space . As Share Foundation Director Danilo Krivokapić cautioned, “If we hesitate excessively, we could develop the wrong strategic directions that it could prove costly to correct in the future”.

EMBRACING THE EU MODEL IS AN IMPERATIVE FOR SERBIAN BUSINESSES TO ACCESS GLOBAL MARKETS WHILE ENSURING THE PROTECTION OF CITIZENS IN THE DIGITAL SPACE

At this juncture – amid a significant slowdown in the EU integration process across the region and with accession fatigue prevalent on all fronts – concerted efforts are needed to advocate for the Western Balkans’ accession to the EU’s Digital Single Market. This endeavour must be preceded by the harmonisation of regulations in this domain.

For example, Turkey, a longstanding EU candidate, was swift in addressing competition concerns in the digital space by proposing amendments to its Competition Law, mirroring the Digital Markets Act, in an effort to adapt regulations to suit evolving business models and safeguard fair competition in the digital sector.

The benefits to both the Union and the region are unequivocal and serve to catalyse further EU integration processes. It thus becomes an imperative to establish a new focal point in the government to champion this development. Potential partners, some of whom we interviewed for this publication, are clearly eager to see such a scenario unfold.

ACCESSING DIGITAL MARKETS

The accession of Western Balkan countries to the EU’s Digital Single Market, together with the previous harmonising of regulations governing this area, could bring benefits to both the EU and the region, and could further encourage the EU integration process

DANILO KRIVOKAPIĆ

Director, SHARE Foundation

Serbia’s institutional framework is harmonised with European regulations to a certain extent, but we are still lacking a lot, says SHARE Foundation Director Danilo Krivokapić.

In accordance with the EU Association Agreement, Serbia is obliged to harmonise its regulations, the most significant example of which is the Personal Data Protection Act, which is almost a word for word transcription of the General Data Protection Regulation (GDPR). Serbia has also adopt-

ed its Law on Information Security, which is harmonised with the first version of the Directive on Network Information Security (NIS Directive), while the new Draft of this law, presented during summer 2023, aims to harmonise regulations with the latest version of the EU regulatory framework, the so-called NIS2 Directive.

“And yet, numerous challenges still remain ahead, given that the EU recently began implementing two important regulations – on digital services and digital markets – that represent a complete-

ly new legal model for managing the digital space,” says Krivokapić.

The Regulation on Artificial Intelligence, which was adopted on 13th March, after a long lengthy in the European Parliament, is no less important.

“These are extremely important regulations for the applying of digital technologies, and how Serbia approaches harmonisation with them will determine not only the possibility of our companies entering the EU and global digital markets, but also the protecting of the basic rights of our citizens in the digital space,” explains our interlocutor.

What are the benefits and dangers of deregulating/reregulating the digital space?

— I think that can be seen clearly in the example of the EU, which has really become a leader in the regulating of the digital space. It seems that, on the one hand, this has caused a slowdown among European companies when it comes to development and innovation, which wasn’t the case in countries with significantly more liberal rules, such as the U.S. and China, which are undoubtedly today’s leaders in the development of digital technologies.

On the other hand, we can talk about the “Brussels effect”, particularly when it comes to data protection rules following the GDPR’s adoption. That regulation set a high standard of protection at the global level, and numerous countries are today being guided by that standard, with

many of them having adopted regulations with a view to the GDPR. This advanced market functioning, with the uniformity of rules significantly raising the level of legal certainty and improving the protection of citizens in the EU and around the world. When it comes to Serbia, I don’t think the right question to ask is how detailed our rules on digital space will be, but rather what our country really can and should control.

Do EU candidate countries today have time/space to wait when it comes to harmonising with European acts, in the way they do with other regulations, or do they have an interest in accelerating that process?

tal Single Market – naturally with the previous harmonising of regulations governing this area – could bring benefits to both the EU and the region, and could further encourage the EU integration process.

As is the case with the GDPR, could Serbia merely transcribe the text of the European AI Act and incorporate it into its own legislation, or does the national context have its own specificities?

— The transcribing of the European regulation on data protection had some extremely positive points. We were among the world’s first countries to adopt the new personal data protection model, with which it became easier for domes-

SERBIA BADLY NEEDS A LAW ON ARTIFICIAL INTELLIGENCE THAT MIRRORS THE MODEL OF THE RECENTLY ADOPTED EU REGULATION

— I believe that our region needs to harmonise with EU regulations governing the digital space as quickly as possible. Considering the complexity of digital infrastructure, and especially the challenges of managing the entire digital ecosystem, I currently don’t see another model that would enable our companies to easily access foreign markets while simultaneously ensuring the protection of our citizens in the digital space. In this sense, I think that we need to follow the EU model, which has a significantly greater influence on the global scene. If we hesitate excessively, we could develop the wrong strategic directions that it could prove costly to correct in the future.

Given that the European integration process has slowed down significantly in this region, with serious accession fatigue on all sides, I think that the accession of Western Balkan countries to the EU’s Digi-

essence it makes these rules easy to breach, given that penalties for noncompliance do not have a significant impact on operations.

It seems to me that we badly need a law on artificial intelligence that mirrors the model of the recently adopted EU regulation. That model is horizontal and based on risk assessment, which in my opinion leaves ample room for research and development, while ensuring a high level of legal certainty. Of course, it is necessary for such a law to be tailored to suit the domestic legal framework in order for us to avoid inconsistencies, but also to harmonise the penal policy with the EU in order for maximally ensure its implementation.

What key challenges will businesses and start-ups in Serbia face when it comes to implementing this new framework?

ETHICS

tic and foreign companies operating in Serbia to comply with the new legal framework, particularly bearing in mind that the EU has a significantly more developed legal framework in this field, which eases the interpreting of new and unfamiliar rules. It likewise guaranteed the highest level of rights for our citizens. On the other hand, simply transcribing the rules without taking into consideration the domestic legal framework did lead to certain contradictory and unclear rules, together with the introducing of institutes that it currently isn’t possible to apply in Serbia. It is also a major mistake that the level of the fines does not correspond with the penalties prescribed by the GDPR – fines exceeding a billion euros have already been imposed in EU countries, while the highest penalty prescribed by our law totals approximately 16,000 euros. This might sound like a great relief for companies, but in

— There are certainly numerous challenges, considering that regulations are becoming an increasingly complex legal matter, both on domestic and foreign markets. This entails high costs of harmonising with the new rules and investing in administrative capacities to ensure internal processes adhere to the new regulation. I think that understanding the ethical dilemmas in the development of new technologies and the impact of technology on society is something that it is no longer possible to avoid in the development of start-ups and businesses. That’s also precisely why we have such a complex regulation.

These challenges are all particularly evident when domestic businesses start collaborating with international partners, primarily from the EU. GDPR compliance is today a standard that’s simply implied, because otherwise companies are exposed to a serious risk of being sanctioned and facing high fines. Given the trend in the adopting of new regulations, we can expect ever more numerous demands to harmonise and comply with ethical rules.

Understanding the ethical dilemmas in developing new technologies and the impact of technology on society is something we can no longer avoid in the development of start-ups and businesses

MISTAKE

It is a major mistake that the level of fines in our Law on Data Protection doesn’t correspond with the penalties prescribed by the GDPR, with companies mistakenly thinking that this is a great relief

HESITATION

If we hesitate excessively in harmonising with the EU, we could develop the wrong strategic directions that it could prove costly to correct in the future

NEBOJŠA BJELOTOMIĆ

CEO of the Digital Serbia Initiative

BUSINESS AND ACADEMIA MUST COLLABORATE BETTER

The business sector should, with state assistance, direct academia towards addressing topics that are in the interest of economic growth and development, as well as encouraging innovation and thus attracting talented students to the fields that we need

According to the latest research conducted by the Digital Serbia Initiative, Serbian start-ups have strong engineering personnel, but still lack knowhow in the areas of sales and marketing. According to Nebojša Bjelotomić, chief executive officer of the

Digital Serbia Initiative, our university system includes these subjects in its curriculum, but the problem is the failure to stress their importance and applicability in real world situations. “The topics needed to further expand the startup ecosystem relate primarily to internationalisation and scaling

(company growth). And sales and business development processes provide the basis for both,” says our interlocutor.

“Representatives of companies (both small and large) also have the responsibility to increase their attractiveness. They should, through cooperation with colleges, reach a position from which they can interest students in these fields of study, but also to direct teaching staff to engage in research in areas of interest, mostly doing so by offering them “live” data,” explains Bjelotomić.

“The academic community has a need to engage in lecturing and studying. The business sector should, with state assistance, direct academia towards dealing with specific areas. Through the creation of student internships, guest lectures and the assigning of case studies, it is possible to attract talented people to the required areas. Given that start-ups lack the resources needed for this longstanding work, the role must be taken on by organisations that provide support within the start-up system.”

To what extent can this shortfall be remedied by non-formal education; how accessible and high-quality is it?

— Non-formal education generally tends to be much more market-oriented than formal education. This means that, for example, it will only address the development of skills needed for B2B sales when it identifies the potential for financial gain. That is perhaps a longer pathway than the one mentioned in the answer to the first question. At the same time, a large number of online courses covering these same topics already exist. They are high-quality and have improved over time. It is true that they have a language barrier factor, i.e. that they are mostly in English. But again, a foreign language mustn’t represent a hindrance if the intention is to apply the acquired knowledge on international markets.

Another option within the framework of non-formal education is for lectures on topics of interest with experts from abroad to be organised by companies themselves – provided they have the capacity – or by support organisations acting on behalf of start-ups.

What is the Digital Serbia Initiative doing on this front and how are your results?

— One example of training for “lacking” skills is the Ninja programme, which the Digital Serbia Initiative introduced in cooperation with JICA (Japan International Cooperation Agency). Within the scope of this programme, expert lectures have been organised for start-ups at an advanced stage of development (that have a developed product). The experts either came from Serbia or abroad, depending on the topic. Topics covered during the course of the programme ranged from basic accounting to online marketing and e-commerce. We hope that this programme will be organised again this year, and that it will this

time have a regional character, i.e. that it will include start-ups from across the Balkans. Alongside this programme, we also hold individual lectures on topics of interest (e.g. on LinkedIn-based sales, with the lecture given by an expert from Sweden). Moreover, through the Career 4.0 programme, we bring together business mentors and high school pupils, introducing them to new occupations in the IT industry, skills, and people who have similar interests.

We discussed the maturing of our start-up market and growing interest in investing in Serbian start-ups among foreign funds in previous years. To what extent have current global trends, such as political and economic uncertainty, impacted these tendencies and what can we hope for in the near future?

— Observing the global situation, benchmark interest rates have risen markedly, under the influence of inflation. This has been characterised by an increase in the “price” of money, but has also reduced its availability. However, this trend is somewhat milder in Europe than in America, according to the reporting of London-based magazine The Economist, in the sense that European start-ups raised slightly less money in 2023 than they managed in 2022, but not to such a dramatic extent as was seen in the U.S. Our start-up ecosystem has another mitigating factor. Due to their relative lack of development, start-ups from our area are “seeking” investments of between half a million and two million euros, which is more accessible compared to larger financing drives. According to preliminary data from domestic accelerator Katapult, which is organised and managed by the Innovation Fund, the group of start-ups that collected investments during 2023 managed to collect almost the same amount of funding as the group from 2022.

At one point, we had ample initiatives to tailor the institutional framework for the work of start-ups. Where do we stand today on that path and how much can we use domestic resources to develop AI-based solutions?

— The institutional framework is advancing. In the Law on Innovative Activity, the state recognised the start-up concept, but also the angel investor concept. It envisaged and subsequently established a reg-

WE HOPE THAT THE NINJA PROGRAMME, IN COOPERATION WITH JICA, WILL BE ORGANISED AGAIN THIS YEAR, AND THAT IT WILL THIS TIME INCLUDE STARTUPS FROM ACROSS THE BALKANS

istry of start-ups aimed at easing cooperation between the state administration and start-ups. We are satisfied that more than 120 companies registered with this registry in the first few months after its establishment and will work to increase that number further. All start-ups wanting to apply for funds that are under the authority of the Innovation Fund or wanting to apply for some of the available tax breaks (such as exemptions from taxes and contributions on the founder’s salaries or exemptions granted on the basis of research and development activities) need to register. The process is automated to a large extent, in order to reduce the complexity and required application time.

AI INCREASINGLY PRESENT IN INDUSTRY

The Government Data Center in Kragujevac is one of eight European data centres classified as Class 4, which represents the highest internationally recognised level of security and reliability

DANILO SAVIĆ

Data Cloud Technology CEO

Those who don’t focus on developing artificial intelligence on time will find it challenging to catch up later – says our interviewee, before explaining Serbia’s spot on the map of countries that are furthest ahead when it comes to digitalisation and the development of information and communication technology (ICT).

Since its opening, the Data Centre has repeatedly proven itself to be a significant initiator of Serbia’s fourth industrial revolution and digitalisation. Can we be satisfied with the speed at which we’re advancing towards the future?

— The fourth industrial revolution bridges the gap between people and technology, unlike the previous three revolutions that only changed how tasks were per-

formed. Data has become one of the most important resources in this context. There is no longer any industry that’s untouched by information and communication technologies; digitalisation is an inevitability unfolding before our eyes.

I am pleased that we are part of the story in which UN experts have recognised and positioned Serbia high on the global list of countries based on the criterion of progress in the digitalisation of state administration. Our country currently ranks 40th, while in terms of the speed of progress it ranks an excellent 10 th globally. The role of the State Data Centre in Kragujevac and Data Cloud Technology in these successes primarily lies in the aspect of digitalisation-supporting infrastructure. In such instances, we always emphasise our joint contribution with the team from the Office for Information Technologies and eGovernment.

Serbia acquired its first supercomputer at your State Data Centre in 2021. How important is this for the sustainability of the economy, scientific development and the state administration?

— Based on the Strategy for the Development of Artificial Intelligence in the Republic of Serbia for the 2020-2025 period, a national AI platform has been established and made available to the scientific community. This platform provides excellent support to scientific research and, consequently, economic development. Support for scientific research is formally regulated through agreements to implement, improve and expand on the use of artificial intelligence in Serbia with all universities in the Republic of Serbia and several prominent institutes, as well as science and technology parks in Belgrade, Novi Sad, Čačak and Niš.

We further aim to promote industry’s greater adoption of artificial intelligence. Given the extensive use of the AI platform, we have set a goal of significantly increasing capacities in the near future, making us absolute leaders in this part of Europe.

We are on the verge of extremely rapid global changes. Those who don’t focus on developing artificial intelligence on time will find it challenging to catch up later. This applies not only to compa -

THERE IS NO LONGER ANY INDUSTRY THAT’S UNTOUCHED BY INFORMATION AND COMMUNICATION TECHNOLOGIES; DIGITALISATION IS AN INEVITABILITY UNFOLDING BEFORE OUR EYES

nies, but to entire countries, underscored by the significant importance of the National AI Development Platform.

Thanks to having earned the highest international standard certification for data centre security and reliability, you have attracted the largest and most important companies in the IT sector. Whose data do you store?

— We are one of only eight Data Centres in Europe to be classified as Class 4, which is the highest internationally recognised level of security and reliability. We have recently undergone recertification, which was verified by Germany’s TÜV, as was the certification process itself. This involves the most serious measures and indicators, prompting the rhetorical question: in what other areas are we among the top eight in Europe?

As a logical consequence of the aforementioned, our partners today include some of the global market’s most important players: Oracle, IBM and Huawei, among others. Naturally, our clients include all telecommunications companies operating in Serbia, all relevant companies on the domestic ICT market and renowned companies from beyond the IT sphere that store their data with us.

I would like to highlight that we recently acquired our first client from the region in the form of Poštanska štedionica Bank from Banja Luka, thus continuing our very successful cooperation with Poštanska štedionica Bank. It is very pleasing to us that this partner is from Republika Srpska.

When will construction of the Innovation District begin? Could it be said that it represents the realisation of new visions and aspirations to advance in this area and further accelerate the development of Serbia’s ICT sector?

AMONG THE PREREQUISITES FOR MODERNISATION AND DIGITALISATION IS SECURE, EASILY ACCESSIBLE AND FAST DATA –PRECISELY THE MISSION OF OUR TEAM

Data Cloud Technology is mentioned in the “Serbia 2027 Leap into the Future” plan for modernisation and digitalisation. What is the focus on: expanding capacities; building additional modules; or purchasing new supercomputers?

Our country currently ranks 40th, while it ranks 10th globally in terms of the speed of progress on the digitalisation of state administration

— The answer to your second question is affirmative, but the strategies and visions of the Innovation District extend far beyond merely contributing to the development of the ICT sector in Serbia. With the laying of the cornerstone, construction of the District is officially underway, representing a logical continuation after promoting Kragujevac as a major IT centre with the construction of the State Data Centre. The National Centre for Information Security is planned to operate within the District. Additionally, it will host Serbia’s 5th science and technology park and a digital centre with entertainment and sports facilities that are open to members of the IT community. The Innovation District will be built in phases, due to it being an extensive investment that cannot be realised quickly.

It is important to note that the District will be open to citizens and visitors, while commercial lessees at the State Data Centre can obtain the necessary office space there.

— The focus is on everything you mentioned. The resources of the artificial intelligence platform, which is available to the scientific community, will be significantly increased in the coming period. The State Data Centre is expanding its production capacities within the framework of the initial project, but is doing so faster than originally planned. We will soon begin technologically equipping the modules where equipment for new and additional equipment for existing clients will be housed. Market demand for our services is high and we strive to meet clients’ needs. Among the prerequisites for modernisation and digitalisation is secure, easily accessible and fast data – precisely our team’s mission.

Thanks to the development of the ICT sector, Belgrade and Novi Sad are no longer the only cities in the country that attract good companies and experts in this field. Is the Data Centre’s impact on Kragujevac and Serbia apparent?

— The dilemma over Kragujevac’s role in developing our ICT sector no longer exists. We are proud of this fact and confident that this contribution will continue to grow in the future. The Innovation District also means creating new job opportunities for young engineers and professionals who will build their careers here without ever needing to leave Kragujevac. I cannot think of anything more positive than what is happening in our city. I believe the momentum of ICT sector development in Serbia will also find its footing in other cities, not just in Belgrade, Novi Sad and Kragujevac.

ur interlocutor works continuously to improve its software solutions and adapt them to the requirements of existing clients and the needs of new markets that are opening up to this company. And it is thanks to these efforts that they remain at the very top.

OAfter a full two decades, hundreds of satisfied clients and many software solutions, you continue to thrive in the company of high-tech firms that are changing the face of Serbia and the region. How do you explain this success?

— Surviving in such a company can be explained in one word: focus. And that means being focused on several keys factors, the first of which is quality when it comes to products and services. INOVA offers its users high-quality software solutions and superior services that meet all clients' needs. The quality of our most popular solution in the telecommunications field, TeleCAD-GIS, is a key factor in the company’s longterm success. The second place is focusing on reputation, integrity and commitment to users, thanks to which we are persevering on the market and striding towards the top.

We continuously work on innovation and adapting our products and services to market changes and clients’ needs We aim to adapt ourselves to new technologies and trends, while in the meantime

QUALITY FIRST AND FOREMOST

INOVA-geoinformatika’s software solutions are applied in many areas – from telecommunications and electrical power grids, via road infrastructure to ecology – and serve to change the fundamental structure of the economy

GORAN MEDIĆ

Executive General Manager at INOVA-geoinformatika

striving to maintain and improve the level of quality.

At the foundation of everything are the latest technologies, machine learning, artificial intelligence etc.

— Given that the INOVA name is rooted in the word innovation, we strive to justify that name and to continuously improve our products. By applying cutting-edge

APPLYING CUTTING-EDGE TECHNOLOGIES, SUCH AS AI, ENABLES OUR PRODUCTS TO LEARN AND ADAPT ON THE BASIS OF THE DATA THAT THEY PROCESS

technologies, such as AI, it enables our products to learn and adapt based on the data that they process. Through geospatial data analysis, our products predict the needs of clients or identify patterns that prove useful when it comes to making decisions.

The INOVA team is focused on utilizing the latest technological tools and platforms to ensure that our products are competitive and satisfy the high standards of the geoinformatics industry. This

includes using advanced algorithms, cloud computing, the IoT and other technological innovations.

INOVA adapts and improves its products continuously, through careful market research and understanding clients’ needs. One example of this is the latest version of the TeleCAD-GIS software, which enables the team to satisfy the demands of different investors under shorter deadlines and in a simplified way. A product design focused on flexibility and scalability enables it to adapt to the existing and new users and markets.

Are your solutions the key to your future success?

— More efficient management of human resources helps our users improve the efficiency of their employees, create better quality solutions and thus improve their competitiveness, which results in more optimal use of resources, reductions in costs and improved efficiency. Through its products, INOVA helps companies adapt to digital transformation and take advantage of the potential of geoinformation technologies to improve their business processes.

We could thus say that our products play a major role in leading society into the future, enabling us to better understand and more efficiently utilize resources, improve connectivity and mobility, encourage innovation and digital transformation.

BANKING OF THE FUTURE

The development of technology has been transforming banking for more than two decades, from the start of internet use to the rise of online and mobile banking. And yet, the banking industry finds itself again on the brink of another transformative era, driven by rapid advances in artificial intelligence and the emergence of generative AI. As we look to the future of banking, it is crucial for banks to prepare for the changes brought by these technologies, not only in terms of operational efficiency, but also in the way they interact with clients and compete in the marketplace

Banca Intesa COO

AI and generative AI are set to revolutionise the banking sector by automating routine tasks, enhancing decision-making processes and providing personalised customer experiences, while also assisting in fraud detection and risk management, making the banking ecosystem safer and more resilient. As a consequence, the way banks work is about to change radically. New skills, approaches and mindsets will be needed, not only in IT, but—more critically—in every function and at every level of bank. Banks will need to invest in upskilling and reskilling their employees to work alongside AI, focusing on areas where human empathy and creativity are irreplaceable.

In an increasingly competitive landscape, banks must leverage AI to stay ahead. Current predictions are that banks are likely to benefit more from generative AI than any other industry. This involves not just adopting AI for internal processes, but also using it to enhance customer engagement. Implementing AI in everyday processes will not bring any bank a competitive advantage, but not acting quickly will certainly

create a disadvantage. By analysing client data, AI can help banks anticipate needs and offer tailored solutions, making it harder for competitors to lure clients away. Furthermore, banks should collaborate with fintechs and tech firms to access cutting-edge AI technologies and foster innovation.

Hyper-personalisation is the future of customer engagement in banking. By harnessing AI and big data analytics, banks can create highly personalised customer experiences, from customised financial advice to individualised product offers. This level of personalisation fosters client loyalty and increases lifetime value. Banks should also explore the use of chatbots and virtual assistants powered by generative AI in order to provide 24/7 personalised support, making banking more convenient and accessible.

If they are to prepare for the future of banking, banks need to embrace digital transformation, i.e. invest in digital infrastructure and adopt cloud technologies to support AI integration, focus on data privacy and security amid increased reliance on AI and data analytics, foster a culture of innovation and increase their agility by encouraging a mindset of lifelong learning and experimentation to keep pace with tech-

nological advances and work closely with regulatory bodies to navigate the ethical and legal implications of AI in banking.

Banca Intesa, which operates as part of the international banking group Intesa Sanpaolo, has been relying on AI-based tools for years, primarily in automating business processes, developing risk models, segmenting its customer base and creating personalised offers. In seeking to further deploy new tech, we plan to use generative AI initially for internal optimisation and productivity improvements, for example to enable employees to respond to customer queries, find the required information and perform the necessary analyses in a way that will not only simplify their daily tasks, but also improve their interaction with clients and, ultimately, customer satisfaction.

The future of banking is poised for a significant shift, driven by AI and hyper-personalisation. Banks that prepare proactively for these changes – by investing in technology, upskilling their workforce and prioritising customer-centricity –will be well-positioned to thrive in this new era. By embracing innovation and adapting to the evolving landscape, banks can unlock new opportunities and deliver unparalleled value to their customers.

ZORANA BRANKOVIĆ

PREDRAG SKOKOVIĆ Managing Director & Co-founder at Quality House

CORPORATE

LIFELONG LEARNING

Quality House is a company that has been providing software testing and ISTQB accredited training services for IT firms of all sizes for two decades and is today known as a trusted global partner

When, in partnership with Quality House, I founded a branch in Serbia in 2016, we combined our knowledge and experience with colleagues from Bulgaria and relayed that across the entire territory of the Balkans, says MD and co-founder Predrag Skoković, noting that the company is today best known across the region for its courses, despite outsourcing remaining its dominant service.

How did your beginnings look; what led you to decide to deal with software testing?

— It was 20 years ago that my business partner, Mitko Mitev, founded company Quality House in Sofia, Bulgaria, with the aim of offering quality control services, i.e. the testing of software products. The initial idea was to offer classic outsourcing services, to make Quality House employees who have appropriate qualifications in the area of testing available to other IT compa-

Does the wide spectrum of business domains that you support require that you adapt quickly?

nies. The need to organise courses intended for professionals also soon imposed itself.

Interestingly, global organisation ISTQB was formed just a few years earlier and defined the scope of knowledge and skills that need to be possessed by those dealing with software testing. Quality House recognised this as a good foundation to offer software testing courses in accordance with the rules included within the teaching material promoted by ISTQB. Given that I switched from my career as a programmer to a successful software tester many years before founding Quality House, recognising the need to expand this mission was a natural progression.

Outsourcing remains Quality House’s dominant service, but it is now supported by professional courses that compel our employees to pursue certification, and then to advance further and learn how to transfer the knowledge acquired as lecturers.

— Nothing can be done today without software, because it forms part of every business sector – from medicine, via the automotive industry, gaming and gambling, to banking and finance – but someone has to produce that software in accordance with all good practices. Software is just a support tool in most business sectors, but we need to learn what those sectors do. That doesn’t mean that we will learn medicine or banking, but we need to understand the specifics of those professions in order to ascertain whether the software has the appropriate quality. In this sense, we have to adapt very quickly and learn constantly. It is enough to note how much the IT world has changed in the last six to 12 months and to realise that someone had to test it all. All of us who deal with software testing had to monitor all trends, adapt to them and be aware of every new solution appearing. That’s why we often emphasise that learning never ends.

Your company is among the co-organisers of the SEETEST conference, which will be held in late September. Is this an important event for your industry?

— The SEETEST conference is among the most highly attended European events of this type. It emerged as a need of people gathered around Quality House and the SEETB organisation, as our regional committee for Southeast Europe, to give something back to the community and to exchange knowledge with as many colleagues as possible worldwide. We launched it in 2008, with about 150 participants, and today we bring together an average of between 600 and 700 software testers. This year’s next SEETEST will be held in Zagreb for the first time, because we believe that the Croatian market has advanced significantly. And this turned out to be a good decision, because we’ve already sold 200 tickets.

MARGRETHE VESTAGER IS EXECUTIVE VICE PRESIDENT OF THE EUROPEAN COMMISSION

HOW TO THINK ABOUT AI POLICY

As policymakers and regulators around the world grapple with recent developments in artificial intelligence, they should look to the European Union for a basic model of how to balance freedom and safety. The key is to focus not on the technology, but on the risks that are likely to accompany its various uses

In Poznan, 325 kilometres (200 miles) east of Warsaw, a team of tech researchers, engineers and child caregivers are working on a small revolution. Their joint project, “Insension,” uses facial recognition powered by artificial intelligence to help children with profound intellectual and multiple disabilities interact with others and with their surroundings, becoming more connected with the world. It is a testament to the power of this quickly advancing technology.

Thousands of kilometres away, in the streets of Beijing, AI-powered facial recognition is used by government officials to track citizens’ daily movements and keep the entire population under close surveillance. It is the same technology, but the result is fundamentally different. These two examples encapsulate the broader AI challenge: the underlying technology is neither good nor bad in itself; everything depends on how it is used.

AI’s essentially dual nature informed how we chose to design the European Artificial Intelligence Act, a regulation focused on the uses of AI, rather than on the technology itself. Our approach boils down to a simple principle: the riskier the AI, the stronger the obligations for those who develop it.

AI already enables numerous harmless functions that we perform every day – from unlocking our phones to recommending songs based on our preferences. We simply do not need to regulate all these uses. But AI also increasingly plays a role at decisive moments in life. When a bank screens someone to determine if they

Fines would range from €35 million ($37 million) or 7% of global annual turnover (whichever is higher) for violations of banned AI applications

qualify for a mortgage, it isn’t just about a loan; it is about putting a roof over their head and allowing them to build wealth and pursue financial security. The same is true when employers use emotion-recognition software as an add-on to their recruitment process, or when AI is used to detect illnesses in brain images. The latter is not just a routine medical check; it is literally a matter of life or death.

In these kinds of cases, the new regulation imposes significant obligations on AI developers. They must comply with a range of requirements – from running risk assessments to ensuring technical robustness, human oversight, and cybersecurity – before releasing their systems on the market. Moreover, the AI Act bans all uses that clearly go against our most fundamental values. For example, AI may not be used for “social scoring”

or subliminal techniques to manipulate vulnerable populations, such as children.

Though some will argue that this high-level control deters innovation, in Europe we see it differently. For starters, time-blind rules provide the certainty and confidence that tech innovators need to develop new products. But more to the point, AI will not reach its immense positive potential unless end-users trust it. Here, even more than in many other fields, trust serves as an engine of innovation. As regulators, we can create the conditions for the technology to flourish by upholding our duty to ensure safety and public trust.

Far from challenging Europe’s riskbased approach, the recent boom of general-purpose AI (GPAI) models like ChatGPT has only made it more relevant. While these tools help scammers around the world produce alarmingly credible

AI’S ESSENTIALLY DUAL NATURE INFORMED HOW WE CHOSE TO DESIGN THE EUROPEAN ARTIFICIAL INTELLIGENCE ACT, A REGULATION FOCUSED ON THE USES OF AI, RATHER THAN ON THE TECHNOLOGY ITSELF: THE RISKIER THE AI, THE STRONGER THE OBLIGATIONS FOR THOSE WHO DEVELOP IT

phishing emails, the same models could also be used to detect AI-generated content. In the space of just a few months, GPAI models have taken the technology to a new level in terms of the opportunities it offers, and the risks it has introduced.

Of course, one of the most daunting risks is that we may not always be able to distinguish what is fake from what is real. GPAI-generated “deepfakes” are already causing scandals and hitting the head-

lines. In late January, fake pornographic images of global pop icon Taylor Swift reached 47 million views on X (formerly Twitter) before the platform finally suspended the user who shared them.

It is not hard to imagine the damage that such content can do to an individual’s mental health. But if applied on an even broader scale, such as in the context of an election, it could threaten entire populations. The AI Act offers a straightforward response to this problem. AI-generated content will have to be labeled as such, so that everyone knows immediately that it is not real. That means providers will have to design systems in a way that synthetic audio, video, text, and images are marked in a machine-readable format, and detectable as artificially generated or manipulated.

Companies will be given a chance to bring their systems into compliance with the regulation. If they fail to comply, they will be fined. Fines would range from €35 million ($37 million) or 7% of global annual turnover (whichever is higher) for violations of banned AI applications; €15 million or 3% for violations of other obligations; and €7.5 million or 1.5% for supplying incorrect information. But fines are not all. Noncompliant AI systems will also be prohibited from appearing on the EU market.

Europe is the first mover on AI regulation, but our efforts are already helping to mobilise responses elsewhere. As many other countries start to embrace similar frameworks – including the United States, which is collaborating with Europe on “a risk-based approach to AI to advance trustworthy and responsible AI technologies” – we feel confident that our overall approach is the right one. Just a few months ago, it inspired G7 leaders to agree on a first-of-its-kind Code of Conduct on Artificial Intelligence. These kinds of international guardrails will help keep users safe until legal obligations start kicking in.

AI is neither good nor bad, but it will usher in a global era of complexity and ambiguity. In Europe, we have designed a regulation that reflects this. Probably more than any other piece of EU legislation, this one required a careful balancing act – between power and responsibility, between innovation and trust, and between freedom and safety.

TECH TRENDS

ARE YOU READY FOR THE FUTURE?

Here we take stock of what technology has brought us in 2024 and what it has in store for us in the future. Digital transformation doesn’t end – it’s an ongoing process, and the breakthrough trends that made 2023 one of the most exciting years for innovation continue to reshape our world in many exciting ways

Machine intelligence, the blurring of the boundaries between the real and the virtual, and shaping the ongoing evolution of the internet will all radically impact our lives. But perhaps most important of all will be the search for ways to continue to grow and prosper while minimising the damage we do to the environment – and perhaps even reversing some of the damage that’s been done in the past.

So here’s the overview of these game-changing trends, along with pre-

dictions for how each of them will impact life, society and the planet.

Generative AI – Everyday Automation

Last year was the year that generative AI burst into the mainstream, while 2024 is the year that the world gets to grips with how truly powerful and useful it can be. Today, if you’re not a techie, just the phrase artificial intelligence (AI) can cause a shiver of fear – if you’re not worried about it taking over the world or destroying the human race, you might be

THE GENIE IS OUT OF THE BOTTLE, AND WHILE THERE ARE UNDENIABLE CHALLENGES AROUND ETHICS AND REGULATION THAT STILL HAVE TO BE SOLVED, 2024 WILL BE THE YEAR WHEN EVERYONE STARTS TO UNDERSTAND JUST HOW TRANSFORMATIVE GENERATIVE AI WILL BE TO OUR LIVES

nervously waiting for it to steal your job and make you redundant.

But as generative AI finds its way into more of the applications we use every day, from search engines to office software, design packages and communications tools, people will come to understand its potential. Used properly, it’s like having a super-smart personal assistant on hand 24/7, making us more efficient, faster and more productive.

Most importantly, by handing over our everyday menial brainwork – obtaining information, scheduling, manag-

ing compliance, organising ideas, structuring projects – to AI, we will find ourselves with more time to leverage our truly human skills. We will spend more time being creative, exploring new ideas and original thinking, or communicating with humans rather than programming machines. The genie is out of the bottle, and while there are undeniable challenges around ethics and regulation that still have to be solved, I believe 2024 will be the year when everyone starts to understand just how transformative generative AI will be to our lives.

Phygital Convergence

The real and the digital are becoming increasingly intertwined. Technologies like augmented reality (AR), virtual reality (VR) and the immersive internet are breaking down barriers between the physical world and the digital domains where we are spending more and more of our time. More so than ever before, we exist as digital avatars within virtual en-

science of genomics mean we can break down the fundamental essence of life into digital code, which can then be manipulated and rebuilt in the real world in order to engineer new medicines and eradicate diseases.

In 2024, we will continue to see less and less distinction between the real world and the virtual world. This means the digital is becoming increasingly realistic, and the real is becoming as flexible and malleable as the digital.

Sustainable Technology

Sustainable technology will continue to take centre stage during 2024, as countries and corporations continue to work on meeting net-zero commitments. At the same time, individuals will increasingly leverage technology in order to minimise their personal impact on the environment.

SUSTAINABLE TECHNOLOGY WILL CONTINUE TO TAKE CENTRE STAGE DURING 2024, AS COUNTRIES AND CORPORATIONS CONTINUE TO WORK ON MEETING NET-ZERO COMMITMENTS

vironments. This is true for work, where we collaborate remotely through platforms like Zoom, Teams and Slack, and play, where online gaming and e-sports are more popular than ever. We use social apps like TikTok and Instagram to create virtual spaces where we share moments from our “real” lives – curated and filtered to create digital personalities that become our virtual selves.

Across industries, we see this concept emerging in the form of the digital twin – a virtual representation of a real-world object, system or process. This could be as simple as an individual component or as complex as an entire city or even an ecosystem. Importantly, the digital twin is built from data captured from its real-world counterpart. Advances in the

Sustainable technology includes more environmentally-friendly ways of doing things we already do – such as the electric cars, bikes and public transport that continue to increase their market share in 2024. It also includes novel solutions to environmental problems, such as carbon capture and storage, as well as green and renewable energy technologies. The circular economy will become an increasingly important concept as durability, recyclability and reusability are built directly into products at the design stage. And the tech world will further embrace ideas such as green cloud computing, where infrastructure and services prioritise the reduction of energy consumption and carbon emissions and sustainable apps – software tools designed to help us live in a more eco-friendly manner.

ADVANCES IN THE SCIENCE OF GENOMICS MEAN WE CAN BREAK DOWN THE FUNDAMENTAL ESSENCE OF LIFE INTO DIGITAL CODE, WHICH CAN THEN BE MANIPULATED AND REBUILT IN THE REAL WORLD IN ORDER TO ENGINEER NEW MEDICINES AND ERADICATE DISEASES

Challenges that developers and users of sustainable technology must face during 2024 include a need to develop ethical and sustainable methods for sourcing and extracting materials needed for manufacturing devices, infrastructure demands created by changing consumer habits, such as the adoption of electric vehicles, and potential disparities between different geographic or socio-economic groups in their ability to access green alternatives. We are also becoming increasingly alert to the presence of greenwashing – superficial efforts intended purely to generate positive PR around a particular technology.

Quantum Computing

There’s been a growing buzz around quantum computing for a while now, and I believe 2024 will mark the year when this is set to transition to tangible benefits. Quantum computers are capable of carrying out vast numbers of calculations simultaneously by harnessing weird and wonderful elements of quantum physics, such as quantum entanglement and superposition. This enables them to operate using quantum bits (qubits) that can exist in multiple states simultaneously, rather than a state of either 1 or 0, like traditional computer bits.

Early investors in quantum technology include banks and financial services organizations that hope to be able to enhance the power of AI systems developed in recent years for purposes of fraud detection, risk management and high-frequency trading.

Quantum computing doesn’t speed up every job we use computers for, but in 2024, we're starting umest to see benefits as it’s applied across various compute-heavy fields, including medical discovery, genome sequencing, cryptography, meteorology, material science, optimisation of complex systems like traffic flows through large cities, and even the search for extraterrestrial life.

These are all fields that hold enormous potential for solving challenges facing us and our planet, and we will find out what breakthroughs will be achieved with the help of quantum computing in the near future.

CYBER RESILIENCE

Research suggests that one in two businesses has been the victim of a successful cyberattack in the past three years, and the cost of these attacks to industry is expected to grow to over $10 trillion by the end of 2024. In the face of this fast-growing threat, technology solutions designed to bolster defences and provide us with a fighting chance are high on every organisation’s must-have list.

Cyber resilience goes beyond cyber security, though, as it also encapsulates measures that can be taken to recover and ensure continuity when defences are breached or due to circumstances beyond our control. This might mean having remote working procedures in place to ensure businesses can function when staff can’t get to central locations – a technology solution that might not traditionally be considered an element of cyber security.

Automation of cyber defence through AI and machine learning, integrated frameworks that merge security measures with continuity protocols and awareness of societal factors from social engineering attacks to PR firefighting are all essential elements of any cyber resilience strategy.

Cyber threats are becoming more sophisticated, and competition to bring new solutions leveraging breakthrough technologies like AI to market is intensifying. This ensures that cyber resilience will become an increasingly prominent trend throughout 2024 across business and consumer technology.

IS BLOCKCHAIN A TRUST MACHINE?

Like all relatively recent innovations, blockchain networks have suffered from plenty of hype, scandal, and mistrust. But with the technology having demonstrated its functionality, robustness, and utility, it now just needs regulatory standardization and safeguards to bring the wider public on board

As the crypto winter thaws, and financial institutions renew their interest in digital assets, an old debate has re-emerged over whether blockchain is truly a “trust machine,” as The Economist described it in 2015.

A figure from fifteenth-century Venice can help answer that question. Though he was neither a technologist nor a banker, the friar Luca Pacioli is remembered today for developing the double-entry bookkeeping accounting system that underpins much of the modern economy. It was his ingenious model that introduced debits and credits to the method of recording transactions in two separate accounts.

This seemingly boring and cumbersome tweak to a core business function didn’t just ensure accuracy and curb fraud; it also gave owners new insights into how to run and improve their businesses and cut costs. Under Pacioli’s system, efficiencies soared, commerce accelerated, and the Renaissance took flight. Double-entry accounting became a cornerstone of economic activity because it was simple, easily shared, and undeniably useful. Centuries later, financial statements based on Pacioli’s work became mandatory for any business. Such is the power of a basic infrastructure upgrade.

The broader lesson is that an innovation that makes it from conception to global adoption typically passes three tests of public trust: Does it work? Is it useful? Is it safe? Or put another way, users expect competence, value, and reliability.

The underlying blockchain technology that Bitcoin’s creator(s) deployed builds elegantly on the foundation that Pacioli laid. Imagine if a fifteenth-century Florentine merchant’s ledger entry showed up instantly on the books of every other merchant. Such a distributed ledger creates triple-entry (or effectively infinite-entry) accounting, making the data immutable and incontestable.

That functionality alone is transformative, but the architecture of blockchain networks gives them superpowers well beyond financial applications.

After settling literally trillions of transactions, blockchain’s fundamental claim to facilitate the reliable exchange of value

has been well verified. Though it is little solace to those who lost funds during the industry’s implosions in recent years, those episodes reflected irrational exuberance and old-fashioned fraud, not any flaws of distributed-ledger protocols.

These failures were as predictable as they were regrettable. Excitement about emerging technologies typically outpaces their utility, leaving a wake of disappointments. Even the most promising technologies struggle with early design flaws. AI chatbots can hallucinate. Electric-vehicle batteries can fail in extreme cold or heat. New software is often buggy. And blockchain networks have not been fully immune to hacks and performance issues. But their battle-tested durability makes them well positioned to upgrade the way we move money.

What about usefulness? Fortunately, responsible market players today are using blockchain to do many other things: delivering mobile, corruption-resistant humanitarian aid to refugees; lowering the costs of charitable giving, remittances, and cross-border payments by 80%; expanding access to basic financial services; giving workers in high-inflation countries a portable store of value; establishing provenance to power the “creator economy”; transmitting money at scale with the ease, security, and speed with which the internet transmits data; and upgrading legacy financial rails that date back to the 1970s.

While still nascent, these applications undeniably deliver high social and economic value. That brings us to the third question: whether blockchain-based financial rails are safe –which, in financial services, means regulated. Can users expect common, high standards around the world? Not quite yet, but we’re getting close.

The good news is that 2024 is poised to bring greater regulatory certainty. Japan, Hong Kong, Singapore, and the European Union have all established strong standards and consumer protections for this growing ecosystem. And the US Congress could follow suit this year with bipartisan digital-asset and stablecoin legislation that would crack down on illicit financing and counterfeit digital currencies. That would make a material difference in public confidence.

By Josh Burek