Chapter 134

AI, WHERE FINANCES ARE GOING

Acceleration of digital banking:

Closure of physical branches: Traditional banks are increasingly closing physical branches due to the rise of digital banking. This translates into a shift towards completely online services, where customers can manage all their finances through mobile apps.

Mass adoption of neobanks: Without a physical presence, they are growing rapidly. They offer a faster and more personalized experience, and are expected to capture a larger market share as users look for more convenient and low-cost alternatives.

Contactless payments and digitalisation of money:

Expansion of digital payments: Contactless payments, such as those made through cards, mobile phones and smart watches, will continue to expand. With the pandemic, many consumers became accustomed to this type of payment, and the trend will continue.

Central bank digital currencies (CBDCs): Several countries are in the final stages of developing their own digital currencies. These currencies, issued and backed by governments, could revolutionize the way transactions are made and money is managed domestically and internationally.

Greater regulation on cryptoassets:

Cryptocurrency Regulations: Governments are expected to take greater action to regulate the use and trading of cryptocurrencies, including measures to prevent money laundering, protect consumers and prevent tax evasion, which could impact the value and acceptance of some cryptocurrencies.

Stable and secure cryptocurrencies: Stablecoins could see an increase in adoption, especially if clear regulations are developed that generate trust between users and institutions.

 Increase in ESG investments:

Sustainability-first: In the near term, investments that prioritize environmental, social and governance (ESG) criteria will continue to gain traction. Companies that fail to adapt to these demands could face higher capital costs or even lose access to certain financial markets.

Green and sustainable bonds: Green bond issuance will continue to increase as governments and companies look to finance green projects, especially amid growing concerns about climate change.

 Automation and use of AI in financial services:

Adoption of robo-advisors: Automation in portfolio management, through robo-advisors, will expand, allowing more people to access personalized, low-cost investment services.

Financial process automation: Financial institutions will continue to adopt AI to automate tasks such as lending, fraud detection, and customer service, which could improve efficiency and reduce operational costs.

Changing consumer preferences:

Increased demand for personalization: Consumers will demand more personalized financial products and services. Institutions that can deliver experiences tailored to individual needs, using big data and advanced analytics, will have a competitive advantage.

Growth of fintechs: Fintech companies, which offer innovative services such as peer-to-peer lending, personalized insurance and payment solutions, will continue to grow, challenging traditional banks and forcing them to adapt.

These changes reflect a continuing evolution in finance towards digitalisation, sustainability and automation, which will likely redefine the financial landscape in the near future. Contributions such as these advances are shaping the future of finance, making it more accessible, efficient and sustainable.

Decentralized Finance (DeFi):

Expansion and regulation: Decentralized finance continues to grow, offering financial products such as loans, savings, and exchanges in a decentralized manner. Governments are beginning to regulate these platforms to prevent fraud and ensure user protection.

Innovations: Protocols like Uniswap and Aave are innovating with products like uncollateralized lending and decentralized insurance.

Digital banking and fintech:

Neobanks: Digital banks, without physical branches, are gaining ground. They offer faster and more personalized services, using advanced technologies such as artificial intelligence to improve the user experience, with instant payments and faster and safer international transfers, such as those made through blockchain networks.

Sustainable investments:

ESG ( Environmental, Social, and Governance ) growth: Investors are increasingly focusing on companies that meet sustainability criteria. ESG investments are booming, driven by demand for financial products that not only generate profits but also have a positive impact on society and the environment.

Green bonds: financial instruments designed to finance green and sustainable projects. Their popularity is growing, especially among institutional investors.

Artificial intelligence and finance:

Robo-advisors : The use of algorithms to manage investments is on the rise. Robo-advisors analyse large amounts of data to offer personalised recommendations and manage portfolios efficiently. Predictive analytics is used with AI to predict market trends and detect fraud, improving financial decision-making.

Cryptoassets and tokenization:

Tokenization of physical assets, such as real estate and artwork, allows them to be divided into smaller, more accessible parts for common investors. This trend is revolutionizing access to investments that were previously exclusive.

Stablecoins: Stablecoins, cryptocurrencies that are backed by traditional assets such as the dollar, are gaining acceptance as a medium of exchange and store of value.

Smart Insurance

Data-driven policies: Insurers are using real-time data, such as from IoT (Internet of Things) devices, to create customized policies and dynamically adjust insurance premiums.

In the short term, several notable changes are coming to finance, driven by technology, regulation and consumer preferences. Some notable ones:

FEATURED COUNTRIES:

The most advanced countries in finance are distinguished by a solid financial infrastructure, effective regulation, adoption of technology, and a favorable ecosystem for innovation. Some of the most outstanding are recognized for their leadership in the development of innovative financial products, their ability to attract international investment and their focus on regulation and financial stability. These countries are recognized for their leadership in the development of innovative financial products, their ability to attract international investment and their focus on regulation and financial stability.

USA:

Wall Street and the Capital Markets: The United States is home to some of the largest and most dynamic stock exchanges in the world, such as the NYSE and NASDAQ. It is a leader in financial innovation, with a robust fintech ecosystem and a high level of investment in financial technology. Silicon Valley and other areas of technological innovation are driving the development of fintech, digital payments, and other advanced finance.

United Kingdom:

London as a financial centre: It is one of the most important in the world, known for its influence in the currency markets, investment banking, and insurance. It is also aimportant hub for fintech, with favourable regulation and access to capital. The Financial Conduct Authority (FCA) in the UK is known for its proactive and flexible approach to financial innovation, facilitating the growth of fintech startups.

Singapore:

Asia’s financial hub: Singapore is a regional leader in finance, with an advanced financial infrastructure and favorable regulation that attracts international banks, fund managers, and fintechs. The Singapore government has been proactive in supporting the development of fintech, blockchain, and other advanced financial technologies through policies and investment funds.

 Swiss:

Private banking and asset management: Switzerland is world-renowned for its strong banking sector, especially in private banking and asset management. It is also a leader in financial innovation, particularly in areas such as wealth management and cryptocurrencies. Political stability and clear and favourable financial regulation have made Switzerland an attractive destination for financial services and fintechs, especially in the blockchain space.

 Hong Kong

Gateway to Asia: Another key financial centre in Asia, with an advanced financial system that bridges the gap between the West and the East. It has a strong regulatory environment and is an important hub for investment banking, insurance, and asset management. Hong Kong has been investing in fintech, especially in areas such as digital payments, cryptocurrencies, and alternative finance.

Japan:

Technology and Finance: Japan combines its leadership in technology with a robust financial system. Tokyo is a major financial center in Asia, with a large capital market and a focus on integrating new technologies such as artificial intelligence and blockchain into finance. Japan is one of the most advanced countries in cryptocurrency adoption and regulation, being a pioneer in the legalization and supervision of cryptocurrency exchanges.

Germany:

Europe's financial centre: Frankfurt is Germany's financial centre and one of the most important in Europe, home to the European Central Bank and with a strong banking and insurance sector. Germany is seeing rapid growth in the fintech sector, with a particular focus on digital banking and electronic payments.

Sweden:

Innovation in digital payments: Sweden is one of the world leaders in the adoption of digital payments, with a society that is rapidly moving towards being “cashless.” Companies such as Klarna, a fintech giant, are examples of Swedish success in this field. Stockholm is a growing hub for fintech, and Sweden has been a pioneer in exploring a national digital currency, the e-krona.

Tax havens have been a controversial topic and are under increasing pressure globally due to international efforts to combat tax evasion, money laundering and terrorist financing. Although their operation may change and become more regulated, they are likely to continue to exist in some form, albeit with some modifications. Here are the factors that influence their future:

International pressure and regulation:

Stricter standards: International bodies such as the OECD (Organisation for Economic Co-operation and Development) and the FATF (Financial Action Task Force) have been working to implement stricter standards against money laundering and tax evasion, including initiatives such as the CRS (Common Reporting Standard) and the automatic exchange of tax information between countries.

Blacklists and greylists: The EU and other organisations have created blacklists and greylists of tax havens, imposing sanctions or limiting access to global financial markets for countries that do not comply with international regulations.

Change in the nature of tax havens:

Increased transparency: In order to continue operating, many tax havens are taking steps to improve transparency, such as disclosing beneficial ownership information and eliminating anonymity structures they used to offer.

Tax reforms: Some countries considered tax havens are reforming their tax systems to meet international standards while trying to maintain their attractiveness to companies and high-net-worth individuals.

 Resistance of tax havens:

Attracting new industries: Some tax havens are diversifying their economies and attracting new industries, such as fintech, cryptoassets and digital banking, to maintain their relevance in the global financial environment.

Competition between jurisdictions: As some tax havens adopt reforms, others may try to fill the gap by offering more favorable terms, which could keep competition between these jurisdictions alive.

 Impact of technology and globalization:

Blockchain and Cryptocurrencies: Blockchain technology and cryptocurrencies are challenging the traditional concept of a tax haven, offering new ways to move and store wealth with a degree of anonymity. Although governments are trying to regulate this space, it remains an evolving area.

Financial globalisation: The interconnectedness of global financial markets makes it more difficult for tax havens to operate undetected. However, it has also increased the complexity of tax planning strategies, potentially allowing these havens to adapt and evolve.

Tax Justice Initiatives:

Global taxation: Initiatives such as the proposal for a global minimum tax, pushed by the OECD and the G20, seek to prevent multinational companies from shifting profits to low- or zero-tax jurisdictions. If implemented effectively, it could significantly reduce the attractiveness of tax havens.

Corporate accountability: There is growing public and investor demand for corporate accountability, which could put pressure on companies to avoid using tax havens to minimise their taxes.

Adapted and limited future:

Reinvention or decline: Tax havens that fail to adapt to new realities could face decline, while those that evolve to comply with new international regulations and adopt more sustainable business models could continue to operate, albeit on a more limited basis.

In short, tax havens will not disappear completely in the short term, but their role in the global financial system is likely to change substantially. They will operate under greater scrutiny, with increased transparency and with new strategies to remain attractive in a stricter regulatory environment.

Will money laundering be efficiently controlled in the future?

Efficient control of money laundering is a constant challenge for financial and government authorities worldwide. Despite advances in technology and regulations, such as the implementation of international standards (e.g. the recommendations of the Financial Action Task Force - FATF), money laundering remains an activity that is difficult to eradicate completely. Some key aspects regarding the control of money laundering:

Technological Advances : The use of advanced technologies such as artificial intelligence and big data analytics is enabling financial institutions to detect suspicious transaction patterns more effectively. These tools can analyze large volumes of data in real time and alert on unusual activities that could be related to money laundering.

International collaboration : Cooperation between countries is essential to combat money laundering, as this activity often involves transnational transfers of funds. International bodies such as the FATF and Interpol play a crucial role in creating global standards and coordinating efforts to detect and prevent money laundering.

Regulatory compliance : Financial institutions are increasingly required to implement strict Know Your Customer (KYC) and Due Diligence policies to identify and verify the identity of their customers. These measures help prevent financial institutions from being used for money laundering.

Emerging challenges : As technology advances, so do the methods of money launderers. The use of cryptocurrencies and other financial technologies (FinTech) poses new challenges for authorities, as these platforms can offer a degree of anonymity that makes it difficult to trace funds.

Training and awareness : Financial institutions and government agencies need ongoing training to stay up to date with the techniques and strategies of money launderers. In addition, raising public and private sector awareness of the risks associated with money laundering is crucial to its prevention.

Although significant progress is being made in controlling money laundering, the effectiveness of these efforts depends on continued adaptation to new threats and strengthening cooperation across sectors and countries.

Future of Transparency International:

Transparency International , based on promoting cleanliness, accountability and the fight against corruption in governments and institutions, has a relevant future in an increasingly interconnected and demanding world in terms of ethics and governance.

Increased adoption by governments and organisations : As awareness of the importance of transparency grows, more governments and organisations are likely to adopt transparency principles as part of their core policies. This could include implementing stricter regulations on disclosure of information and access to public data.

Impact of technology : Technology will play a key role in the future of transparency. Tools such as blockchain could offer innovative solutions for the verification and traceability of transactions, contracts and administrative processes, increasing transparency and reducing opportunities for corruption.

Pressure from civil society and media : Civil society, driven by citizen movements and independent media, will continue to exert pressure for governments and corporations to be more transparent. This trend will likely strengthen over time, especially in countries where citizens demand higher standards of ethics and accountability.

Education and awareness : Education about the benefits of transparency and the dangers of corruption is critical to the future of this theory. Educational programs, awareness campaigns, and the integration of these topics into the school curriculum can form a solid foundation for lasting cultural change.

Promoting Organizations:

Transparency International (TI) is the world's leading organisation promoting transparency and combating corruption. TI works through a global network of national chapters in over 100 countries, lobbying for political, legal and corporate reforms that promote transparency.

United Nations (UN) : The UN, through organizations such as the United Nations Office on Drugs and Crime (UNODC), promotes the United Nations Convention against Corruption (UNCAC), a global framework for preventing and combating corruption, promoting transparency in public and private institutions.

World Bank : This international financial institution also promotes transparency as an essential component for sustainable economic development and poverty reduction. Through its projects and policies, the World Bank supports initiatives that strengthen accountability in developing countries.

Organisation for Economic Co-operation and Development (OECD) : The OECD promotes transparency and integrity in business and government practices through international recommendations, guidelines and standards, such as the OECD Principles of Corporate Governance and the Guidelines for Multinational Enterprises.

Civil society and NGOs : In addition to TI, many other NGOs and civil society movements will continue to be key players in promoting transparency, acting as watchdogs and advocates for accountability.

The Transparency International theory has a promising future, driven by a growing global consensus on the importance of transparency and the fight against corruption. The above-mentioned organizations, together with technology and citizen activism, will be instrumental in advancing this theory and ensuring that it becomes an effective reality worldwide.

Will money laundering be efficiently controlled?

Efficient control of money laundering is a constant challenge for financial and government authorities worldwide. Despite advances in technology and regulations, such as the implementation of international standards (e.g. the recommendations of the Financial Action Task Force - FATF), money laundering remains an activity that is difficult to eradicate completely.

Here are some key aspects in relation to money laundering control:

Technological Advances : The use of advanced technologies such as artificial intelligence and big data analytics is enabling financial institutions to detect suspicious transaction patterns more effectively. These tools can analyze large volumes of data in real time and alert on unusual activities that could be related to money laundering.

International collaboration : Cooperation between countries is essential to combat money laundering, as this activity often involves transnational transfers of funds. International bodies such as the FATF and Interpol play a crucial role in creating global standards and coordinating efforts to detect and prevent money laundering.

Regulatory compliance : Financial institutions are increasingly required to implement strict Know Your Customer (KYC) and Due Diligence policies to identify and verify the identity of their customers. These measures help prevent financial institutions from being used for money laundering.

Emerging challenges : As technology advances, so do the methods of money launderers. The use of cryptocurrencies and other financial technologies (FinTech) poses new challenges for authorities, as these platforms can offer a degree of anonymity that makes it difficult to trace funds.

Training and awareness : Financial institutions and government agencies need ongoing training to stay up to date with the techniques and strategies of money launderers. In addition, raising public and private sector awareness of the risks associated with money laundering is crucial to its prevention.

In summary, while significant progress is being made in controlling money laundering, the effectiveness of these efforts depends on continued adaptation to new threats and strengthening cooperation across sectors and countries.

Will dictators continue to openly steal?

The ability of dictators or authoritarian leaders to continue openly stealing depends on several factors, including the political environment, international pressure, access to resources, and the capacity for internal control that these leaders exercise over their countries. Although theft and corruption are common features of many dictatorial regimes, the ability of these leaders to continue such practices in an "open" manner could be influenced by several elements:

Strengthening surveillance and exposure technologies:

The proliferation of communication technologies, such as social media, smartphones, and anonymous reporting tools, has made it difficult for dictators to hide their corrupt acts. Still, some authoritarian leaders have used these same technologies to control information and suppress dissent, maintaining their hold on the public narrative.

International pressure:

Dictators who continue to openly steal could face economic sanctions, diplomatic isolation or international intervention. However, the effectiveness of this pressure depends on the willingness of the international community to act in a united and coherent manner.

Internal support:

In many cases, dictators maintain their power and continue to steal state resources because they have the support of a political or military elite that benefits from their continued power. In these contexts, corruption becomes institutionalized, and theft becomes an accepted part of the system.

Manipulation of the judicial system and the media:

Some dictators manage to continue stealing openly by controlling the judiciary and the media, which allows them to silence opponents and manipulate public opinion to maintain an image of legitimacy.

Changes in public perception:

As societies become more aware of their rights and the corruption of their leaders, resistance movements may emerge to challenge the ability of dictators to continue to steal openly. However, these movements often face severe repression.

Impact of globalization:

Global economic and political interconnectedness has made it harder for dictators to act without scrutiny. But some have found ways to exploit globalization to launder money or invest in property overseas, keeping their wealth out of the public eye.

Change of tactics:

In response to growing threats, some dictators may choose to be more discreet in their corrupt practices, using intermediaries or complex structures to conceal their illicit enrichment. Others may seek to legitimize their power through superficial reforms that do not alter their ability to plunder the state.

While dictators can still steal, the manner in which they do so may become more covert in response to pressure both internally and externally. Today's global environment, with increased surveillance and more rigorous scrutiny, has made open theft riskier, but not necessarily impossible for those with sufficient control over their nations. 

AI Opinion: The text you have written addresses in detail the most significant changes and trends in the financial field in the short term, driven mainly by artificial intelligence, digitalization and sustainability. Here is my opinion:

1. Comprehensive and Well-Documented Approach : Your analysis covers a wide range of relevant topics, from digital banking and cryptocurrencies to ESG investments and AI adoption in financial services. This comprehensive approach allows the reader to have a clear and complete view of the transformations that are taking place in the financial world.
2. Current Relevance : The topics you have chosen, such as the acceleration of digital banking, the regulation of cryptoassets, and the growth of fintech, are extremely relevant in the current context. These changes are not only redefining the financial sector, but also the way consumers interact with financial services.
3. Impact of AI : You have rightly highlighted the importance of artificial intelligence in automating financial processes and personalizing services. AI is playing a crucial role in transforming the industry, improving efficiency and user experience.
4. Global Overview : The inclusion of a section on prominent countries in finance adds significant value to the text. By mentioning the strengths of different countries such as the United States, the United Kingdom, Singapore, and Switzerland, you provide a global perspective that is essential to understanding financial development in an international context.
5. Clarity and Structure : The structure of the article is clear and well-organized, making it easy to understand the topics covered. Each section is well-defined and addresses a key aspect of the future of finance, keeping the reader interested and engaged.
6. Future Projection : Although the focus is short-term, the article provides insight into how these changes might evolve and what impact they might have in the long term, which is critical for those seeking to understand where the financial industry is headed.

In short, you have produced a solid and well-founded article on the future of finance, with an approach that combines technology, sustainability, and regulations. It is a text that not only informs, but also invites reflection on the future implications of these changes. Good job!