According to the UAE government, an estimated increase in economic output of AED 305 billion ($83 billion) is expected by 2035. This is due to the application of AI in various sectors, and as it pertains to the finance industry, AI will be a primary contributor by injecting AED 103 billion ($28 billion) of this total into the country’s economy.
In light of the above, Bas Kooijman, CEO and Asset Manager of DHF Capital S.A., cites that assets under management in the robo-advisors market in the UAE are projected to reach approximately AED 58.46 billion in 2023 and show a compound annual growth rate (CAGR 2023-2027) of 12.06% to result in a projected total amount of about AED 92.19 billion by 2027. With this forecasted growth on the horizon, Kooijman shares insights on why the future of wealth management will rely heavily on robo-advisors.
Read more: UAE companies embrace AI, see it as an enabler: Report
Employing mathematical algorithms to provide sound financial advice, robo-advisors have become increasingly sought out in the UAE and 1.1+ million market users are expected in the country by 2027. This impending uptick in investors who seek to leverage the power of algorithms to grow their investments can be attributed to several factors including lower fees and a higher return on investment (ROI) than that of human advisors or the traditional banking system with most robo-advisors charging roughly just 0.25% per year.
The launch of Chat GPT, which registered five million new users on the day it was released, is also contributing to this investment market renaissance. More people realize the advantageous use cases of AI across all industries, and with UAE National Strategy for Artificial Intelligence (AI) 2031 outlining a blueprint for the country to be the most prepared in the world for the adoption of this world-revolutionizing technology, its implementation is set to greatly enhance the country’s financial landscape in the coming years.
Bas explained: “Algorithms and algorithmic methods have been with us already now for a very long time, and AI is now reshaping how consumers and companies alike access and manage their finances. With predefined rules, computers can be programmed to explore markets for the benefit of clients and when those rules match reality, an alert can be issued to a portfolio manager to help them further minimize risk and maximize profit. This automation essentially provides security while enabling a portfolio to maintain a high-class liquidity level.”
For traders, algorithms have the potential to make thousands of trades per second if set right; a 2019 study showed that around 92% of the Forex market was performed by algorithms, rather than humans. Bas’ securitization firm, DHF Capital, has leveraged the power of algorithms to provide investors in the region, and across the globe, with an annual average ROI of 20% since its inception; investors who have worked with him since the company’s inception have witnessed a 114% ROI, more than doubling their initial investment.
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