- ‘Patchwork’ AI regulatory landscape
- Costly hybrid system required
- Compliance is killing initiatives
Differing rules surrounding artificial intelligence and the lack of a global regulatory environment is doubling the cost of new investments and complicating business expansion, a leading UAE financial institution has revealed.
Amith Rajan, executive vice-president at Mashreq Bank, told AGBI that a “patchwork” AI regulatory landscape has prevented the bank from entering some countries, and the return on investment is “not justifiable”.
Without giving specifics, Rajan said that some regions are friendly to “cloud” on-demand resources that people can access over the internet whenever needed, while others are not.
This forces the bank to adopt a costly hybrid architecture of physical infrastructure and cloud services to accommodate all perspectives.
“If we want to have a global solution, we have got to cater to both,” Rajan said, speaking on the sidelines of the launch of the Dubai AI & Web3 Festival, which will take place in September.
“Your cost just doubles straight away. As a bank, being heavily regulated, we will of course comply. It just makes that so much harder.”
Mashreq Bank operates in the UAE, across the GCC, Egypt, the US, the UK and Hong Kong, so must navigate a complex web of global regulations.
Banks are not the only companies facing such problems.
Ali Katkhada, chief information officer at the construction company Depa Group, which is listed on Nasdaq Dubai, said the company’s attempts to navigate the complexities of regulations in the metaverse and with non-fungible tokens have been challenging.
“You not only have to consider the regulation of the head office, but [also] in Europe, Africa and Asia, where we operate,” he said.
“We had to kill one of our initiatives only because of regulation and compliance as a publicly listed company.”
Interest in AI surged after the 2022 public debut of ChatGPT, which brought capabilities such as writing essays and coding into the spotlight.
High-profile tech leaders, including Tesla’s Elon Musk and Apple’s Steve Wozniak, have urged for a regulatory pause on AI to establish more robust safety and ethical standards.
Grand View Research, an India/US market research company, expects the global AI market to reach $1.8 trillion by 2030, with a compound annual growth rate of 36.6 percent.
Proactive approach
By 2035 AI’s contribution to the UAE’s economy could pass $28 billion, making up 14 percent of gross domestic product.
Initiatives such as the UAE’s Regulations Lab, established in 2019 to preemptively shape legislation for emerging technologies, and the issuance of temporary licences for AI testing, underscore the nation’s proactive stance on innovation.
Elsewhere, however, rulemakers are struggling to play policy catch-up, weighing up the delicate balancing act between legislation and innovation.
In Europe, although some EU member countries are keen to liberalise the use of facial recognition technology by the police, the European Union has implemented tighter restrictions as part of its AI Act, which was passed in June last year.
Quentin Reyes, CEO of Hyperfusion, the largest AI cloud cluster in the GCC, is more optimistic about the region’s potential.
“We think the future of innovation is going to be at a crossroads, at places like Dubai,” he said.