At the World Economic Forum continues in Davos, Switzerland, KPMG US Chair & CEO Paul Knopp sat down with Yahoo Finance's Julie Hyman and Brian Sozzi. They discussed AI and its impact on businesses, with Knopp noting "the rate at which it's evolving, and the velocity of change is just phenomenal."
According to a new KPMG survey, 76% of millennials and Gen Z say AI already impacts their work lives, so they are less worried about job displacement, Knopp says, indicating "they understand the technology and they also know that it's the future." He advocates companies build "a trusted AI framework" focused on augmenting roles rather than replacing them.
Knopp sees AI assisting in tasks from risk identification to accounting work, automating "mundane, routine activity," so workers can upskill into higher judgement roles over time. The goal is leveraging AI's power to enhance business insights and worker productivity, not drive layoffs.
This interview is part of Yahoo Finance's exclusive coverage from the World Economic Forum in Davos, Switzerland, where our team will speak to top decision-makers as well as preeminent leaders in business, finance, and politics about the world’s most pressing issues and priorities for the coming year.
Watch this full episode of Yahoo Finance Live here.
Editor's note: This article was written by Angel Smith
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JULIE HYMAN: Welcome back to Yahoo Finance's coverage of the World Economic Forum in Davos, Switzerland. I'm Julie Hyman. That's Brian Sozzi right there next to me. We've been talking a lot about AI, of course. And one of the themes we've been exploring is whether AI is going to displace jobs.
There's an interesting new survey out from KPMG. They talked to 1,000 college-educated folks in the US. I believe it was just US. And interestingly, around the concerns around AI, job displacement is not number one.
Paul Knopp is with us now. He is head of KPMG. So was that surprising? First of all, welcome. I'm so excited to talk about this study, I guess. That was a surprising result to me because it seems like jobs is such a point of discussion for people.
PAUL KNOPP: It is. So, you know, the fact that 76% of millennials and Gen Z said that generative AI already impacts their professional lives in a big way and that they're not concerned about job displacement, what I think that really means is they understand the technology. And they also know that it's the future and that it's actually mainstream at this point.
So while a lot of companies are still running experiments and pilots, it really is getting to the point where we're nearing industrialization. And a lot of companies are already using it in certain applications of their business.
BRIAN SOZZI: What are big companies doing to upskill their workforce to drive these AI initiatives?
PAUL KNOPP: Well, so they're putting tools in their hand, tools like Microsoft Copilot, ChatGPT. Often, you know, like a company like KPMG, we put ChatGPT advisory audit in a secure, private environment to make sure that it can be trusted.
And that really is what the game is, making sure you are bold, fast in developing your generative AI solutions but also making sure that you build trust around it. We call it a trusted AI framework or ethical framework. And that's gotten a lot of attention this week here at Davos.
BRIAN SOZZI: Paul, we're always ask you about other companies. We've never seem to ask you about KPMG. You're the CEO of KPMG. Are you hiring a good number of folks? How many people will hire this year to support AI, advising companies on AI, or building out AI functions in your own company?
PAUL KNOPP: Well, so last year, 2023, we hired about 7,800 people, our second highest number ever in terms of full-time hires and interns. This year we're expected to be in a similar range. And if you think about it, everybody is going to be trained on AI at KPMG because we need all of our professionals to know that tool.
So we're really excited about that. Of course, we have some development experts. And we have those that train our people that are more specifically focused on generative AI. But it's really important that all of our people ideate around generative AI so we can bring interesting solutions to our clients but also make work more interesting.
JULIE HYMAN: Are there sort of accounting applications from generative AI, right?
PAUL KNOPP: Well, in accounting and auditing and tax, you think about-- there are principles, standards, laws, or regulations that all exist in content. So it's perfect for generative AI because generative AI can mine that information. And then you can much more quickly put together tax position papers, accounting position papers, determine how you might look at the risk of a certain business process.
JULIE HYMAN: Is it already doing that?
PAUL KNOPP: Oh, yes. We can do that today. And so you can identify risks in a business process. You can use a version of ChatGPT that's secure to help develop those kinds of-- that kind of output.
BRIAN SOZZI: I have to-- I have to follow up on this because my brother's an accountant. So I have to send him this link. So you're saying-- is AI going to displace the account? So I go give my taxes to my brother. At some point, maybe I just don't give it to him. Maybe I give it to a digital person.
PAUL KNOPP: No, I would not say that it's gonna replace the account. And so I think it's going to make more mundane routine activities automated and upskill more people over time. So I think the reason that 76% of millennials and Gen Z said that they find this to be really important to their professional lives is they find it incredibly interesting. It makes their work they do more valuable. I think over time, they'll actually be net job growth in the market because of generative AI.
JULIE HYMAN: And going back to the survey, people weren't as worried about job displacement. They were somewhat worried. But what they were most worried about, fake news and information, which I thought was really interesting-- 2/3 of folks worried about that-- and scams. A similar number worried about that. So, you know, we see, sort of, anecdotal examples of that, right? So that's one point of discussion here. What needs to happen to prevent all of that from happening?
PAUL KNOPP: So several things need to happen. One is that you need to start with an ethical AI framework. And two, you need to understand that trust is a precious commodity in business. It's the most precious commodity. And if you lose trust because of generative AI content that is not reliable, that hallucinates, or is just fake, or misinformation, you're going to eventually lose business.
Now, I understand that there are some organizations in the world that might want to produce fake content for a certain purpose. And it's gonna be incumbent upon companies, governments, and other organizations to call that out and to pay strict attention to that.
BRIAN SOZZI: You've been here about pretty much all week, Paul. Has there been one or two tech companies or a piece of software or something AI-related that really blew you away and got you thinking of what could be possible?
PAUL KNOPP: Well, I haven't seen-- believe it or not, I haven't seen demonstrations of those products here this week because I've been mostly in meetings and in sessions. But I see them all the time.
And so to me, it's just amazing that every generative AI, large language model, or image model, or video model is multiple times better than the model before it. So the rate at which it's evolving and the velocity of change is just phenomenal. And the amazing thing is that all those models just get better with each generation.
BRIAN SOZZI: What is demand looking like for you right now leaving AI aside for a moment? You know, it does seem like there is a relative amount of optimism about the US economy that we're hearing. How is that informing your business?
PAUL KNOPP: So we would agree with most economists. And our economist thinks that it'll be low growth this year, somewhere at 2 and 1/2% to 3% range. Demand for our services is still strong, audit and tax. It's a little bit softer in consulting. We saw a lot of companies start to get more cautious with spending in 2023, not just on consulting but on many other things.
A lot of it was the uncertainty around the interest rate environment, the uncertainty around inflation and when it might cool. And that really caused companies to be a lot more cautious. In discretionary spending like that, it's kind of natural that you might see that hit.
Now, there's a lot of reasons that companies are still consuming a lot of consulting too. We still see our clients going through amazing business transformations. And they need to continue to transform to be competitive. Performance improvement is still huge.
And then generative AI. Companies trying to scale generative AI in a responsible, ethical way to their platforms to make sure that they retain a competitive advantage. We see a lot of that and we think that that softening is actually going to subside later in the year.
BRIAN SOZZI: Are you getting clients, Paul, coming to you now saying, Paul, look, I'm concerned of another potential Trump presidency. How do I prepare my financial statements for another potential surprise?
PAUL KNOPP: So we don't have clients that specifically ask that question. But, you know, they do worry about geopolitical events. And this week, geopolitics has been a dominant theme here. And of course, there's quite a few elections across the world this year, including in the United States.
I think what businesses are thinking, Brian, is that they're thinking about the fact that they've navigated administrations and split congresses and congresses that are-- or that are controlled by either party over many years.
And what they're trying to communicate to Washington and policymakers and legislators is that job growth for America is really important. And for us to be delivering sustainable value over the long term, we need to be able to work on really important things like tax, trade, immigration, education to make sure over the long term that we're building sustainable value for our enterprises.
So I think we try to keep focused on that and knowing that historically speaking, we've been able to work with almost any administration.
BRIAN SOZZI: All right, we'll have to leave it there for now. Paul Knopp, KPMG CEO, always great to get some time with you on the ground here in Davos.
JULIE HYMAN: Thanks, Paul.
BRIAN SOZZI: Appreciate it.
