Financial and banking sector to become biggest AI spender in Mena, Google says

The financial services and banking sector is predicted to become the highest spender on artificial intelligence technology in the Middle East and North Africa, according to Google.

The sector will have a share of almost 25 per cent of all AI investments in the region, with the use of the technology in banking alone expected to contribute up to 13.6 per cent to the region’s gross domestic product by 2030, the Alphabet-owned company said in the Future of AI in the Mena report. “This would take shape through a range of applications, such as deep learning for algorithmic trading, fraud analysis and investing, as well as smart portfolio management and customer profiling,” the report said.

The overall potential effect of AI on the region’s economic growth is significant, with the Mena region estimated to accrue $320 billion by 2030 from the value added by the technology. This is mostly from costs saved through automating processes, as well as improving products and services across the region’s industries, the report said.

Governments across the Mena region are also introducing several project to use AI to enhance the “speed, accessibility and effectiveness” of public services, said the report commissioned by Google and released by Economist Impact.

“The report shows that the responsible development of AI creates massive opportunities to improve the lives of people in the Mena region and to turbo-charge key sectors of the economy,” said Martin Roeske, head of government affairs and public policy in Mena for Google.

“To ensure we reap the benefits of this wave of technological transformation requires a joint effort between the private sector, governments and civil society, including investments in infrastructure, people, technology and policy development."

Countries in the Mena region have developed national AI strategies to create a conducive business environment but they need more digital policies, for example, in the field of data governance, as well as trust and safety, the report said. Establishing policies is essential to enhance the AI systems in the government and private sectors, said Saqr bin Ghalib, executive director of the Artificial Intelligence Office of the UAE government.

Increased usage of AI as the main factor in systems and businesses ensures the acceleration of digital transformation in the region, he said. The travel and tourism industry, which contributes almost 9 per cent of Mena’s GDP, foresees various uses for AI but data transparency in the region remains a significant challenge, Google's report said.

Increase in online retail and commerce during the Covid-19 pandemic generated deeper pools of customer data that can be used for optimising AI algorithms and improving the customer experience, it said. AI is also expected to support the growth of the transport and energy sectors and boost their contribution to the region's economy by 2030.

The effect of AI systems on the energy sector is expected to contribute more than 6 per cent to the region’s GDP by 2030. AI and machine learning are being introduced to refit electricity grids and reduce system losses and carbon emissions. In the transition towards renewables, AI is expected to play a major role in supporting countries in the region, the report said.

Saudi Arabia and the UAE — the largest economies in the Arab world — are focusing heavily on AI adoption. The UAE is projected to benefit the most in the Middle East from AI adoption. The technology is expected to contribute up to 14 per cent to the country’s GDP — equivalent to $97.9bn — by 2030, an earlier report by consultancy firm PwC indicated.

In 2017, the Emirates appointed Omar Al Olama as its first Minister of State for Artificial Intelligence and later adopted the National Artificial Intelligence Strategy 2031 to promote the growth of the technology. The Mohamed bin Zayed University of Artificial Intelligence in Abu Dhabi was established in 2019 to develop the skills of top talent from across the world to lead workplaces of the future.

The Emirates also plans to boost the number of specialised AI laboratories in the country and accelerate AI research projects, the UAE Council for Artificial Intelligence and Digital Transactions said in February.

Meanwhile, Saudi Arabia aims to attract foreign and local investment worth more than 75bn Saudi riyals ($20bn) in the fields of data and AI by 2030 and is looking to develop customised applications that could propel the use of Arabic language in AI algorithms and software. AI is expected to contribute up to 12.4 per cent to the kingdom's GDP – equivalent to 506.5bn riyals – by 2030, PwC said.