GCC asset management can capitalize on the rise of AI
Running Point and its chief investment officer, Michael Ashley Schulman, CFA, were quoted by New York based Global Finance Magazine in an article — by Mark Townsend, “GCC: Wealth Management Boom” — regarding whether banks in the six-member Gulf Cooperation Council (GCC) can leverage generative artificial intelligence and disruptive technology to capitalize on the exponential regional growth of ultra-high-net-worth families.
Note: The six GCC countries are United Arab Emirates (UAE), Kingdom of Bahrain, Kingdom of Saudi Arabia, Sultanate of Oman, State of Qatar, State of Kuwait
Dubai as a HNW center
Dubai is a regional center for over $8 trillion of private wealth is spread across the Middle East, Africa and South Asia region. With Dubai International Financial Centre’s (DIFC’s) recent launch of the Global Family Business and Private Wealth Centre wealth management growth in the UAE will be even stronger.
FOMO
Traditionally, global banks have had an established broad multinational presence as well as teams with specialized expertise and experience in various investment strategies, asset classes, and financial structures that have allowed them to dominate the wealth management sector in the Middle East Gulf because of the characterization that they can offer services, access, and diversification that regional banks can’t. What it comes down to is that the fear of missing out (FOMO) is as prevalent in wealth management as it is in other aspects of life.
Better, faster, cheaper—pick three
The technological advantage, that previously was a differentiating factor for global wealth managers like HSBC, UBS, Rothschild, Nomura, Moelis, Lazard, and others, may quickly disappear. Generative AI has broken the better, faster, cheaper paradigm where you can now hit all three of them rather than just having to choose two—it will transform business at a compound scale. You could see a fresh rise of lean wealth management businesses offering best of breed services and personalization.
More to the point, regional banks that are not encumbered by expensive legacy systems may be able to do more with less and move and react more efficiently and effectively than larger organizations.
Generative AI brings everyone up to a much higher playing field and democratizes business and creative processes. The big and slow will fall back or die and the quick and nimble will achieve substantial gains.
But it won’t all be about AI. Autonomic systems that support and optimize services as well as privacy and security enhancing systems will also aid the wealth management and family office style experience. Nonetheless, at the end of the day, high touch wealth management will continue to need a tailored blend of top people and top technology. The most rapid growth in bank technology spend could be seen in the Middle East & Africa, which Celent research predicts will grow at an average annual rate of 5.4% through 2027.
Quoted article excerpts are below:
Dubai alone is home to 55,000 high net worth individuals (HNWIs) and over half a trillion dollars of wealth, says Michael Ashely Schulman, partner and chief investment officer at Running Point Capital Advisors, a multifamily office.
Generative AI may provide GCC banks a lever that could transform the region’s wealth management sector, Schulman believes: “Regional banks can leverage AI to offer sophisticated digital platforms and tools to enhance and tailor client services and experiences.” That transformation will depend on the agility of GCC banks. “Generative AI brings everyone up to a much higher playing field and democratizes business and creative processes,” Schulman says. “The big and slow will fall back or die, and the quick and nimble will achieve substantial gains.”
Incorporating AI will require a significant rethink for everyone. But Middle East wealth managers should not merely add AI to current practices, Schulman says, but begin from a more naïve standpoint and relinquish some control to see if workflow and organizational charts can be recreated. “This should be easier for smaller regional firms than for global behemoths,” he says.
In the rivalry among global wealth managers, talent could be a defining issue, Running Point’s Schulman predicts: “At the end of the day, high-touch wealth management will continue to need a tailored blend of top people and top technology.” It is an $8 trillion regional opportunity!
Money is usually attracted, not pursued.
Jim Rohn, American entrepreneur, author, motivational speaker, and mentor to Tony Robbins
Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Past performance is not indicative of future results. Forward-looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-23-70
