DAVOS: Artificial intelligence is revolutionizing how financial institutions operate by streamlining operations at an unprecedented scale, according to a senior executive at BNY.

Hani Kablawi, senior executive vice president and head of international at the American financial services giant, told Arab News the company had leveraged AI for more than five years to enhance operational efficiency, cybersecurity and decision-making processes within its own operations.

Speaking at the World Economic Forum annual meeting in Davos, he added AI had been instrumental in identifying and rectifying potential trade failures. This has allowed clients to re-enter the market faster and improved liquidity at scale, and allowed BNY to make earlier, more informed investment decisions by providing accurate and constantly updated cash balance data.

“As a result of that, we’ve been able to let clients know that there is latency in their systems early because of behind-the-curve volumes going through accounts,” Kablawi said.

“And in doing so, we’ve given our clients the ability to fix or remediate issues a lot earlier in the process than they might have been able to because we have that data.”

All of which, he added, ensured smoother operations by comparing real-time data with historical patterns.

The recent introduction of the internal AI system “Eliza” at BNY has significantly increased productivity, Kablawi said, adding that preparing insights for client meetings — a task that previously took days or even weeks — could now be completed in minutes.

This efficiency extends across investment, resource allocation and operational decision-making, enabling better-informed and faster outcomes, he said.

The bank is also carefully balancing the use of external AI solutions with internal developments, making sure to integrate capabilities within its own secure infrastructure to maintain control over its vast data holdings. 

“We look externally to new capabilities that are being launched and being able to apply that new technology on our data,” he said.

“We’ve got $52 trillion worth of assets in custody and administration, and another $50 trillion in assets under data management, there’s a significant dataset that we’re able to apply the technology to. So, I think we’re in the beginning stages of really extracting the benefits out of AI.”

Saudi Arabia and the wider Gulf region are actively tapping into these benefits, Kablawi added.

Google, AWS and Microsoft Azure are working, albeit on different pathways, on introducing cloud capabilities in the Kingdom and other Gulf markets, while BNY is actively engaging with these providers to ensure their data analytics capabilities can be launched locally.

“As you would expect, we and others are talking to them to make sure that our data analytics capabilities can be launched in-market so that we can comply with local residency data rules, but also enable a data and analytics offering in those markets to a broader market, not just to those that are leading in the space,” he said.

Kablawi highlighted the region’s success in diversifying its stakeholder base through robust trade and investment partnerships, both inbound and outbound.

He emphasized that a well-executed multilateral strategy had strengthened the region’s resilience and created a more stable investment climate, despite heightened geopolitical, energy and climate concerns in the past 18 months. He also noted Saudi Arabia’s particular success in advancing multilateralism, especially over the past five years.

With the inauguration of Donald Trump as the 47th US president having taken place on Jan. 20, Kablawi said many of those in the investor sector would be watching what comes next “with interest.”

He continued: “(With potential) closure of borders and destruction of supply chains or any change in supply chain dynamics, that could create a bit more of an inflationary environment. But we think the growth environment is strong enough that on balance we continue to predict positive flows toward the US (market).”

RIYADH: Saudi Arabia’s reserves at the Kingdom’s central bank saw a 2.8 percent year-on-year rise to SR1.69 trillion ($450.31 billion) in November.

These assets include monetary gold, foreign accounts, and special drawing rights — the International Monetary Fund’s reserve position.

The latter category comprises currency and deposits abroad as well as investments in foreign securities and accounted for 94.6 percent of the total, reaching SR1.6 trillion — an annual rise of 3.12 percent.

Special drawing rights declined to SR77.5 billion, a slight decrease of 0.8 percent, accounting for 4.6 percent of Saudi Arabia’s total reserves.

Created by the IMF to supplement member countries’ official reserves, SDRs derive their value from a basket of major currencies, including the US dollar, euro, Chinese yuan, Japanese yen, and British pound sterling. 

SDRs can be exchanged among governments for freely usable currencies when needed. 

In addition to providing supplementary liquidity, SDRs help stabilize exchange rates, act as a unit of account, and facilitate international trade and financial stability.

The IMF reserve position totaled around SR12.25 billion but recorded an 11.3 percent decline during this period. This category represents the amount a country can draw from the IMF without conditions.

Gold reserves remained steady at SR1.62 billion, a level unchanged since February 2008.

In November, Saudi oil giant Aramco paid $31.1 billion in dividends for the quarter, significantly boosting the country’s reserves.

The Kingdom’s government, which directly holds nearly 81.5 percent of Aramco, receives the majority of these dividends, effectively funneling substantial financial inflows into state coffers.

Investing in foreign assets is a key strategy for SAMA to bolster the nation’s monetary stability and enhance its economic resilience.

Through a diversified portfolio of foreign securities and currency deposits abroad, SAMA ensures liquidity to meet external payment obligations, supports the Saudi riyal’s exchange rate stability, and creates a buffer against global economic fluctuations.

Historically, foreign currency and deposits abroad formed the bulk of Saudi Arabia’s foreign reserves, primarily driven by oil exports. However, since 2004, a shift has been noted in the composition of these reserves.

Data from SAMA shows that investment in foreign securities began to exceed international currency and deposits, rising from a 50.5 percent share in 2004 to 81 percent by June 2007, and standing at 59.75 percent in November.

This shift reflects the Kingdom’s growing focus on diversifying its reserve assets and optimizing foreign reserve management.

To further support oil prices and secure stable oil revenues, Saudi Arabia has played a crucial role in the OPEC+ alliance. Since 2017, the Kingdom has actively participated in oil output cuts to balance global supply and demand.

This strategy, which has kept Saudi Arabia’s production around 9 million barrels per day in recent years, is aimed at supporting oil prices, stabilizing the Kingdom’s oil revenue, and strengthening the global oil market.

Saudi Arabia has been gradually shifting its investment strategy, moving away from holding the majority of its foreign assets within the central bank.

Instead, the focus has been on building substantial sovereign wealth bodies, such as the Public Investment Fund and the National Development Fund, which together manage hundreds of billions of dollars.

This shift aligns with the Kingdom’s broader objective to diversify its reserves and strategically invest in both domestic and international assets.

A key component of this transformation is the Fiscal Sustainability Program, which aims to decouple public spending from fluctuating oil revenues, avoiding the pro-cyclical spending patterns seen in past oil booms.

By expanding PIF and enhancing its capacity to invest in non-oil sectors, Saudi Arabia is actively working to reduce its dependence on oil and ensure a more stable and resilient economic future.