May 22, 2024
We were at the CIM Financial Marketing Leaders’ Summit, where senior Financial Services marketers come together to share knowledge and best practice across the industry. The World Media Group hosted a session with a panel of top finance and business journalists, chaired by Preya Shah, Head of Sales at Reuters. Joining her to discuss the key trends and issues impacting the Financial Services sector were Izabella Kaminska, Senior Finance Editor at Politico, Tola Onanuga, Senior Editor at Business Insider, and Jason Karaian, Business News Director at the New York Times.
Winners and losers
Shah began by asking the panel who they thought were the winners of the last few months within the Financial Services sector. The panel agreed that as inflation and interest rates had risen, it was the big financial organisations such as JP Morgan and UBS, who had come out best, and were poised to continue doing so. The City of London was also a winner, beating France and Germany to become the financial hub in the Euro-dollar clearing battle. As for the losers, it seems that Crypto and Stablecoins have lost some of their lustre.
UAE – the portal to a new multipolar trading environment
According to Kaminska, “When you speak to traders, they’ll always tell you that regulation is a huge opportunity for them, because it creates arbitrage opportunities.” The whole of the West increasingly going on a war-footing undermines the old-fashioned idea of free markets, she says. “Markets are going to become much more command economy-based and traders who understand that and carve out Rick’s Café-type areas of influence in places like the UAE, which I think is going to be the portal to a new multipolar trading environment, that’s where the real opportunity lies.”
An increase in values-based investing
For Karaian, the current environment is pushing financial organisations to do things differently and reach people in a different way. “I think people are thinking more about their values and how they invest,” he says. Financial services brands are thinking about how they screen funds, and how they describe how they screen funds, in a way that attracts clients but minimises backlash from one political tribe or another. He’s noticed that fewer brands are labelling ESG investments for example, due to backlash.
The impact of AI on Financial Services
The topic of AI and the impact it will have on the Financial Services sector was a clear theme throughout the summit, so it’s no surprise it featured heavily in our editors’ discussion.
AI offers great potential to increase efficiency and improve services for customers if companies implement it in a way that allows them to collect lots of data, said Onanuga. The big challenge, however, is figuring out how to build those efficiencies into their everyday systems.
Onanuga is also closely following the search for the must-have AI consumer products. “There’s a lot of talk about the implications of AI and how it can affect bigger picture ideas, but a lot of consumers are just interested in how it’s going to affect their daily lives. With so many companies going all-in on AI, realistically that is going to be the biggest growth area.” With that comes the challenge of ensuring regulation and ethics are keeping pace with innovation.
The unintended consequences of AI
Another challenge is weighing up savings and efficiencies against the unintended consequences of AI. According to Kaminska, “People are beginning to appreciate the energy footprint of AI, and also the new geopolitics that are emerging around it and the fusion of where capital to fund AI projects is going to come from.” She likens the development of new players and new partnerships in the AI space with the original Petrodollar relationship between America and Saudi Arabia.
The politicisation of the Central bank is another area to watch, she says, with situations like the Coutts scandal – which saw Nigel Farage’s account closed by the bank last year – occurring more frequently as AI begins to play a bigger role in the tools banks use to manage reputation.
The hidden danger for analysts
According to Karaian another unintended consequence of AI may be the longer term impact it has on the analyst community in firms such as Goldman Sachs and Morgan Stanley. While AI can no doubt make analysts more efficient, it could also reduce their numbers. “They can use it to read all the S-1s that are coming out and run the numbers on various M&A scenarios, reformat spreadsheets and PowerPoints. Investment banking chiefs are very excited by that,” Karaian says. However, if AI replaces the role that entry-level analysts play in their formative years, it could potentially change investment banking career pathsandthe whole culture of investment banking as a result.
The dead internet
While we tend to think of generative AI as a shiny new technology, Kaminska pointed out that Large Language Models have been around for a long time. Although they have become more sophisticated, AI is still not good enough for Kaminska to use as a journalist – she finds it takes far too long to correct.
She talked about the theory of the ‘dead internet’: “The idea that once the amount of information on the internet is mostly generated by AI rather than humans, it creates a terrible feedback loop where we go from sensemaking to an utter collapse of sense within a very short space of time.” Kaminska likened it to being in a room where the noise level gets higher and higher until everyone starts shouting and can no longer hear.
The upside of the dead internet is that the value of a human touch increases. For example, the role of news organisations, which can bring eyewitness reports to the fore, will become even more essential as the demand for a more trustworthy means of communication returns. That’s good news for quality journalism and for our World Media Group brands. And, as Kaminska joked, who knows, it may even lead to a renaissance in print media!