In the first months of 2024, the S&P 500 hit record highs, propelled by Artificial Intelligence (AI)-related tech stocks. Stocks are up, not just due to AI hype speculation. Jamie Dimon, CEO of J.P. Morgan Chase, emphasized in February 2024 that AI is not just a trend but a tangible reality. And he is right. The preliminary estimation shows that Generative AI could potentially boost banks’ productivity by 30%.
AI empowers computer systems to undertake tasks that traditionally demand human intelligence. Combining Machine Learning, Artificial Neural Networks, and Deep Learning, AI holds immense promise for transforming the financial system.
Rumors suggested in February 2024 that Microsoft-backed OpenAI was seeking $7 trillion to enhance AI infrastructure, potentially involving investment from the UAE. While awaiting official confirmation, the envisaged shift indicates:
AI as a disruptive force in the financial landscape, offering a breakthrough.
The massive financial commitment required for AI progress, notably in AI chip development.
Potential investments from Gulf countries like Saudi Arabia and the UAE recognizing AI’s revenue-generating potential beyond oil trading.
By 2030, AI-generated economic value may account for 15% of these countries’ GDPs. The strategic transformation of Gulf countries through the development of non-oil sectors via investment in AI technologies could be pivotal in the coming years.
As the world witnessed various economic challenges, such as the 2008-2009 financial crisis and the COVID-19 pandemic lockdowns in 2020, the Gulf countries have remarkably demonstrated their economic resilience. The primary driver behind their rapid AI development is the strengthening of investment cooperation with Western nations and Asia, most notably China. By embracing a favorable regulatory landscape and implementing government strategies centered around AI, the region is gaining a competitive edge in the global market.
AI is transforming the Gulf countries’ financial sector in several ways:
Enhanced Customer Experience: Conversational AI-powered virtual assistants have an expanded range of functionality. They are becoming friends with clients, bringing in more emotions and empathy into the interaction.
Fraud Detection and Prevention: AI algorithms have the capability to detect patterns and anomalies, aiding in fraud detection and prevention. This saves countless hours of manual reviews and makes the financial system more secure.
Big Data and AI: AI models analyze big data to make informed decisions, enhancing credit scoring, loan underwriting, and risk assessment.
AI and Stockbrokers: AI algorithms provide automated investment advice and handle trades.
In the early months of 2024, it is evident that Gulf countries are quickly advancing on the AI track.
Saudi Arabia
Saudi Arabia’s Ministry of Investment (MISA) is carrying out the National Technology Development Program (NTDP) with a strong focus on AI. The Ministry has succeeded in attracting Chinese entities interested in investing in AI development in Saudi Arabia. The Saudi Data and Artificial Intelligence Authority (SDAIA) is a special government body that released a statement in January 2024, in which it stated its commitment to facilitating the wide-spread adoption of the technology in Saudi Arabia.
Monsha’at, Saudi Arabia’s agency for enterprise development, is joining efforts to leverage AI. The agency has launched an AI-based platform – “Saudi AI”. This platform is designed to aid local businesses in automating their processes and enhancing productivity.
And we see results. Saudi Awwal Bank (SAB), headquartered in Riyadh, is broadening its collaboration with Mastercard in 2024. The bank is adopting Mastercard Gateway’s Transaction Risk Management (TRM) technology, an AI-powered solution aimed at bolstering its fraud prevention mechanisms and facilitating secure digital transactions. SAB is set to utilize this AI technology to amplify its risk management capabilities and provide a more secure digital banking experience for its customers.
Qatar
Meanwhile, Qatar is charting its own course in AI, a strategy that will be realized through an increase in bi-directional investment flow. For instance, in February 2024, Qatar committed to investing nearly $11 billion in French technology startups and technology funds over the next six years, with a particular emphasis on the AI sector.
On the governmental side, Qatar unveiled two significant initiatives at the Trade Tech Forum in Abu Dhabi in late February 2024, aimed at expediting the integration of technologies such as AI into the global financial web of transactions: Regulation 5.0 for the Future of TradeTech and the Trade-Sustain-AI Initiative. The Trade-Sustain-AI Initiative is poised to foster collaboration between Qatar and international structures, governmental bodies, and industry leaders to generate comprehensive reports that explore the intersection of AI, global financial communications, and sustainability.
UAE
The United Arab Emirates (UAE) is taking a bold step towards AI leadership. On February 27, 2024, its largest company by capitalization, International Holding Company (IHC), appointed an AI-powered Board Observer named “Aiden Insight.” This decision, spearheaded by Sheikh Tahnoon bin Zayed Al Nahyan, who is both the chairman of IHC and the UAE’s national security advisor, highlights the nation’s top-level commitment to AI development.
Aiden Insight is assigned with functions such as big data analysis, risk assessment, and compliance oversight, traditionally performed by human experts. This innovative member is the product of a collaboration between the Abu Dhabi based AI related company G42, Microsoft, and OpenAI.
This further underscores the significant investment of Microsoft and other leading tech companies (collectively known as the ‘Magnificent 7’) in fostering AI innovation. On March 1, 2024, Microsoft unveiled its Copilot AI Chatbot designed specifically for finance professionals using Excel and Outlook, marking a significant milestone in AI application within the financial sector. The Seattle-based firm’s stock soared 10.5% in just the first two months of 2024, helping it maintain its status as the world’s most valuable company. The company’s decision to create a special AI application tailor-made for the needs of financial specialists underscores how the proliferation of AI in finance is a key engine for creating corporate value.
The UAE, like Qatar, advocates collaborative AI investment. Talks with the UK government led to a visit by Michelle Donelan, UK Secretary of Science, Innovation, and Technology, in late February 2024. She met with Omar Al Olama, UAE’s Minister of State for AI, discussing a global coalition for responsible AI development.
Foreseeing the AI surge, the UAE established the Mohamed bin Zayed University of Artificial Intelligence in 2019. Additionally, the country is actively educating its citizens through initiatives like a mass mobile text message campaign emphasizing the importance of AI for the future. This campaign, which included a link to a digital “journey” for further AI learning, attracted over 200,000 UAE residents by the end of February 2024.
To accelerate research and development in AI and other emerging technologies, the UAE launched a $500 million program on February 13, 2024, as announced by the Advanced Technology Research Council at the World Governments Summit in Dubai. Moreover, the UAE’s Artificial Intelligence Strategy 2031 is designed to establish the nation as a worldwide frontrunner in AI advancements.
Oman
Beyond the UAE, Oman is also exploring the AI landscape. In February 2024, the Oman Chamber of Commerce and Industry invited business owners to participate in a research study examining the impact of AI on Small and Medium-sized Enterprises (SMEs) within the context of Oman’s Vision 2040. This study aims to analyze the potential benefits and challenges of AI adoption for SMEs, alongside strategies for leveraging AI technologies for their growth and development. The research will involve a survey of SME owners, industry experts, and academics. The Sultanate recognizes the pivotal role that AI plays in shaping the future and views AI as a powerful instrument to enhance competitiveness across various sectors.
The Gulf countries’ avid interest in AI indicates they are primed to become global pioneers in integrating AI into banking and finance. AI applications drive the relationship between technology, big data, and create value at both the corporate and whole economy levels.
With major investments already underway in developing AI technology and infrastructure, the Gulf countries have laid the groundwork to drive innovation in AI applications for financial services. Their proximity to both Western tech expertise and Asian manufacturing hubs also provides strategic advantages for these countries to effectively leverage AI.
