How will environmental and social criteria influence investment and financing decisions between now and 2035?
“The financial system is essential to meeting the most pressing challenges. For example, we will not be able to move towards a carbon neutral society without mobilizing private investment. The problem is information. To make informed decisions, investors need adequate information, particularly on the environmental or social characteristics of an investment.
The current financial system struggles to provide this type of information. First of all, there are no universally accepted standards for data exchange. Second, data accuracy must be ensured throughout the value chain. Finally, the volume of data to be processed and interpreted by investors will grow exponentially. To address these challenges, we need cutting-edge information technologies, including AI to process data and cryptographic solutions to ensure its accuracy.
How do you think AI will influence the world of finance over the next ten years?
“Financial services is all about data and AI is designed to process large amounts of data. Recent advances in deep learning and language models significantly expand the data that AI can process effectively. AI can now interpret or create text or even images. The challenges will lie in the imperfection of AI tools. We expect computers to provide accurate results – and that’s how regulations are made. We will have to allow computers to make mistakes, just like humans.
The development of AI does not necessarily mean that there will be fewer people working in the financial sector. However, they could have different jobs. On the one hand, we will need more technical specialists to manage AI solutions and, on the other hand, we could see more people in direct contact with the end customer, who might trust a person more than ‘to a computer. This is why the multidisciplinary skills of our workforce will be more than necessary in the financial center of tomorrow. The Future FinTech initiative responds to this challenge through training aimed at finance professionals and organized jointly by the SnT and the Faculty of Law, Economics and Finance of the University of Luxembourg.
What role do you think cryptocurrencies will play in the global financial system? What type of impact will they have in the short, medium and long term?
“It’s a bit like looking into a crystal ball, but given the information I currently have, I don’t think cryptocurrencies as such will play a significant role. Bitcoin and Ethereum can be used for certain purposes, such as storing value. But there hasn’t been much innovation in recent years, phenomena like NFTs have come and gone.
However, I still think there may be opportunities for solutions that build on the underlying technologies. Central banks are likely to issue digital currencies, such as the digital euro, which could have consequences for monetary policy. Digital assets could be used to increase the efficiency of the financial system, for example by replacing intermediaries. But all this will take time.”
This article was originally written translated and edited for the Paperjam website in French.
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