Financial institutions are slated to double their AI expenditure by 2027.
Financial institutions are slated to double their AI expenditure by 2027.

Embracing the AI revolution: enhancing finance through automation



In the realm of finance, where precision and efficiency are paramount, and every decimal point and transaction must be sound, the integration of artificial intelligence represents a profound shift from traditionally tedious triplicated paperwork to data-driven automation.

Big data analytics powered by AI is revolutionising the FinTech and finance sectors, driving innovation, enhancing operational efficiency, and fostering customer-centricity. With good reason, financial institutions are slated to double their AI expenditure by 2027, according to the International Monetary Fund’s projections. This surge in investment underscores the industry's growing conviction in AI as a transformative force, transcending its status as a mere buzzword to becoming a concrete catalyst for growth and innovation.

The finance sector, with its basis in balance sheets and financial data, benefits greatly from AI and analytics algorithms, which can process vast amounts of structured and unstructured data, extracting valuable insights to inform decision-making. In practice, this translates to more accurate risk assessments, investment predictions, and strategic planning based on real-time market trends and consumer behaviours.

With unprecedented speed and accuracy, big data analytics coupled with AI models have the power to consume and scrutinise everything from historical data to current market conditions and enhance risk management practices by identifying potential threats, fraud patterns, and market fluctuations in real-time. This, in turn, allows financial institutions to proactively mitigate risks and safeguard assets.

Another vote of confidence in generative AI (GenAI) is the growing understanding that it holds the promise of more personalized financial advisory services, and the ability to guide clients through their financial journey with tailored insights and confidence-building strategies. The technology takes an in-depth look at immense amounts of data – including transaction histories, spending patterns, and preferences – to personalise services such as investment advice, loan recommendations, and insurance plans, improving customer satisfaction, loyalty, and engagement. This evolution isn't far-future science fiction; it's a tangible trajectory poised to redefine the finance landscape sooner than might be anticipated.

The combination of big data analytics and GenAI, powered by dynamic advanced platforms, enables advanced fraud detection and prevention mechanisms, whereby these technological solutions can detect anomalies, unusual patterns, and suspicious activities in financial transactions, flagging potential fraud instances for immediate investigation and mitigation, thereby safeguarding both customers and financial institutions. They can also identify compliance gaps, monitor transactions for regulatory violations, and generate automated reports, streamlining processes and minimising the risk of penalties or legal issues.

But it involves training generative models on normal transaction data, so these systems learn underlying patterns and distributions to be able to spot deviations as potential anomalies indicative of fraud. These models can, however, create synthetic data that closely mimic real transaction data, enriching the training sets for fraud detection models. This enhanced diversity in data allows for a broader range of examples, potentially improving the models' ability to detect new and emerging fraud patterns.

Beyond fraud, automation powered by GenAI and big data analytics streamlines routine tasks, such as data entry, document processing, and customer inquiries, improving operational efficiency, reducing manual errors, and freeing up human resources to focus on higher-value tasks, innovation, and strategic initiatives, driving overall productivity and cost-effectiveness.

The spectrum of AI's influence extends far beyond operational streamlining; it emerges as an indispensable ally for auditors and investigators, revolutionizing data analysis with unparalleled speed and precision. What previously demanded weeks of laborious effort can now be accomplished in a fraction of the time, akin to having an astute assistant who never overlooks crucial details, ensuring compliance and upholding transactional integrity.

AI's role in the finance sector is emblematic of trust-building, too. By enabling real-time monitoring of transactions and activities, AI-powered systems assume a custodial role, safeguarding the sanctity of the financial ecosystem and instilling client confidence. A symbiotic relationship between human expertise and machine intelligence serves as the bedrock for a more secure and transparent financial landscape. But this narrative transcends mere numerical calculations; it's about empowering individuals with the requisite tools to excel in their roles and fostering deeper client engagements.

Envisioning the future, the potential of AI in finance is boundless. GenAI algorithms will predict future market trends, customer behaviours, and business outcomes based on historical data analysis and pattern recognition, enabling the anticipation of market shifts, and the identification of growth opportunities, empowering financial institutions to stay ahead of the curve and adapt to changing market dynamics effectively.

The advent of AI in finance, then, isn't a story centred on machines; it's fundamentally about people. It's about equipping finance professionals with tools that amplify their capabilities, enhancing client experiences, and collectively steering towards a brighter financial future.

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Helen Cullen, Graydon House 

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Stars: Colin Farrell, Hugh Grant 

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KEY DATES IN AMAZON'S HISTORY

July 5, 1994: Jeff Bezos founds Cadabra Inc, which would later be renamed to Amazon.com, because his lawyer misheard the name as 'cadaver'. In its earliest days, the bookstore operated out of a rented garage in Bellevue, Washington

July 16, 1995: Amazon formally opens as an online bookseller. Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought becomes the first item sold on Amazon

1997: Amazon goes public at $18 a share, which has grown about 1,000 per cent at present. Its highest closing price was $197.85 on June 27, 2024

1998: Amazon acquires IMDb, its first major acquisition. It also starts selling CDs and DVDs

2000: Amazon Marketplace opens, allowing people to sell items on the website

2002: Amazon forms what would become Amazon Web Services, opening the Amazon.com platform to all developers. The cloud unit would follow in 2006

2003: Amazon turns in an annual profit of $75 million, the first time it ended a year in the black

2005: Amazon Prime is introduced, its first-ever subscription service that offered US customers free two-day shipping for $79 a year

2006: Amazon Unbox is unveiled, the company's video service that would later morph into Amazon Instant Video and, ultimately, Amazon Video

2007: Amazon's first hardware product, the Kindle e-reader, is introduced; the Fire TV and Fire Phone would come in 2014. Grocery service Amazon Fresh is also started

2009: Amazon introduces Amazon Basics, its in-house label for a variety of products

2010: The foundations for Amazon Studios were laid. Its first original streaming content debuted in 2013

2011: The Amazon Appstore for Google's Android is launched. It is still unavailable on Apple's iOS

2014: The Amazon Echo is launched, a speaker that acts as a personal digital assistant powered by Alexa

2017: Amazon acquires Whole Foods for $13.7 billion, its biggest acquisition

2018: Amazon's market cap briefly crosses the $1 trillion mark, making it, at the time, only the third company to achieve that milestone

Turkish Ladies

Various artists, Sony Music Turkey 

UAE athletes heading to Paris 2024

Equestrian
Abdullah Humaid Al Muhairi, Abdullah Al Marri, Omar Al Marzooqi, Salem Al Suwaidi, and Ali Al Karbi (four to be selected).


Judo
Men: Narmandakh Bayanmunkh (66kg), Nugzari Tatalashvili (81kg), Aram Grigorian (90kg), Dzhafar Kostoev (100kg), Magomedomar Magomedomarov (+100kg); women's Khorloodoi Bishrelt (52kg).


Cycling
Safia Al Sayegh (women's road race).

Swimming
Men: Yousef Rashid Al Matroushi (100m freestyle); women: Maha Abdullah Al Shehi (200m freestyle).

Athletics
Maryam Mohammed Al Farsi (women's 100 metres).

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Updated: July 09, 2024, 2:24 AM