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AI in finance to inject Dh103b into UAE’s GDP by 2035

Wealth management will rely heavily on robo-advisors in the future

Artificial Intelligence in the financial sector is expected to inject Dh103 billion into the UAE’s economy by 2035 as the Arab world’s most future-ready nation aims to boost the contribution of this game-changing technology to 14 per cent of the country’s gross domestic product – equivalent to around Dh360 billion — by the end of the decade.

According to financial experts, wealth management will rely heavily on robo-advisors in the future. This technology, which employs mathematical algorithms to provide sound financial advice, has become increasingly sought out in the UAE with over a million market users expected in the country by 2027, Bas Kooijman, CEO and asset manager of DHF Capital, said.

Assets under management in the robo-advisors market in the UAE are projected to reach approximately Dh58.46 billion in 2023 and show a compound annual growth rate (CAGR 2023-2027) of 12.06 per cent to result in a projected total amount of about Dh92.19 billion by 2027.

Currently, the UAE is at the top of the Arab world for its readiness to adopt AI technologies. AI was given a huge vote of confidence with a declaration by the UAE’s Minister of Industry and Advanced Technology, Dr. Sultan Al Jaber that it is one of the “most important economic and social game changers of our era.”

The UAE aims to boost its GDP by around 35 per cent ($96 billion) using AI technologies. The country is already on track to double the contribution of its digital economy to GDP to 19.4 per cent from 9.7 per cent in 10 years. It is expected to spend $20 billion in technology, according to a recent report from the Boston Consulting Group

The UAE government first launched its Artificial Intelligence Strategy in 2017, which marked its government’s reliance on various future services, sectors, and infrastructure projects utilising AI. With this initiative, UAE aims to be the world leader in AI by 2031 and expand the use of AI across sectors including education, energy, transportation, space, and technology.

Kooijman said an impending uptick in investors who seek to leverage the power of algorithms to grow their investments can be attributed to several factors including lower fees and a higher return on investment (ROI) than that of human advisors or the traditional banking system with most robo-advisors charging roughly just 0.25 per cent per year.

“AI is now reshaping how consumers and companies alike access and manage their finances. With predefined rules, computers can be programmed to explore markets for the benefit of clients and when those rules match reality, an alert can be issued to a portfolio manager to help them further minimize risk and maximize profit. This automation essentially provides security while enabling a portfolio to maintain a high-class liquidity level,” said Kooijman.

For traders, algorithms have the potential to make thousands of trades per second if set right. A 2019 study showed that around 92 per cent of the Forex market was performed by algorithms, rather than humans.

The Middle East and Africa region will see the world’s fastest spending growth in AI, surging at a compound annual rate of 29.7 per cent over the 2022–2026 period to $6.4 billion in 2026, driven by the UAE and Saudi Arabia, the region’s most vibrant economies.