Economic

What Investors Should Watch for at the World Economic Forum in Davos

January 15, 2020

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3 min read

Photograph by Jason Alden/Bloomberg

Next week, over 2,500 leaders, spanning geographies, generations, and sectors of the economy, will gather in the Swiss Alps to discuss some of humanity’s most pressing issues: geopolitical instability, technological disruption, climate change, and inequality—and explore the idea that we are living through a new, digitally enabled wave of globalization, including in financial services. Here’s a brief overview of what finance professionals should watch for:

Who will be attending Davos?

Approximately 160 financial services chief executives will be present. More than half of those head large global and regional banks, and the rest lead insurance, asset management, financial infrastructure, brokerage, or payments companies. Beyond the private sector, ministers of finance, central bankers, international financial experts, and academics will attend. More than one third of these participants come from emerging economies. Representatives from international organizations will include Christine Lagarde, the Managing Director of the International Monetary Fund, and Roberto Azevêdo, the Director-General of the World Trade Organization. Fintech companies like PayU, Ant Financial, and Circle Internet Financial will also be in attendance.

The Financial Services Agenda in Davos

Artificial Intelligence in Financial Services

Using AI to streamline back-office processes, enhance analytic capabilities, and personalize customer experiences comes with new risks, from unintended model biases to the anti-competitive effects of algorithmic collusion and the new systemic and security risks that arise as services are centralized with a handful of large, networked players. How can we effectively implement and regulate AI in a way that will support rather than undermine the goals of a fair, inclusive, safe and stable financial system? How can regulators create rules that balance innovation and financial stability?

Promoting Global Financial Inclusion

How are cross-border technology-driven platforms like RippleNet, a blockchain-based digital remittance tool, and digital payments for SMEs bringing more people into the financial system? How can financial services companies align incentives and reduce barriers to non-cash transactions? And how will the changing role of employment affect the consumption of financial services globally?

Appropriate Data Use in Financial Services

In the fall of 2018, the World Economic Forum drafted a set of global principles on appropriate data use in financial services to prevent the loss of trust that privacy and data breaches can cause. In Davos, financial services leaders will debate the feasibility of global data frameworks, trends in data localization, and tensions between customer privacy, innovation, and financial inclusion.

Combatting Financial Crime

Financial crime, including money laundering, human trafficking, fraud, bribery and corruption, cybercrime, and theft, is a trillion-dollar-plus pockmark on humanity. Globalization has increased the size, geographical reach, and complexity of supply chains, allowing for more points of entry for illicit activities. Technological innovation is both a friend and foe: AI can help institutions and law enforcement analyze vast quantities of data in search of bad actors, yet technology also facilitates ever more rapid and vulnerable financial transactions and movement of money around the globe.