According to the world’s leading financial experts, the issues that led to the 2008 financial crisis not only persist but have grown exponentially over the past decade, evolving into a significant threat to financial institutions, international markets, and the global economy. This is particularly concerning for countries heavily reliant on export and import trading, such as the United States, China, and Germany.
The primary challenge facing the industry can be distilled to poor financial management, a problem that affects even the largest and most influential institutions. This encompasses a cascade of diverse yet interconnected human errors, including weak regulatory compliance, inaccurate financial reporting, overestimated budget allocations, insufficient financial analytics, inadequate market research, and more. These systemic flaws, rooted in the absence of effective and reliable financial management systems, are alarmingly common across the finance and investment sectors. When combined, they can trigger devastating consequences—not only for individual banks or accounting firms but for entire regional, national, and even international economies.
Financial institutions worldwide are grappling with exponentially growing competition and the constant need to adapt to an ever-changing social, cultural, political, and economic landscape. The bright examples are the forced transformation of banking operational models during the COVID-19 pandemic and the large-scale military conflicts of the 2020s. Furthermore, today’s unstable political climate significantly impacts the financial sector, disrupting the flow of international trade and creating adverse effects on markets and businesses. Frequent political and legislative changes pose enormous challenges for the global economy, particularly in terms of regulatory compliance. These dynamics also heighten the risks of currency market instability and inflation.
In addition, the financial sector faces a pressing need to adapt to the rapid pace of digital transformation, requiring the re-learning and restructuring of many processes to integrate emerging technologies, AI-driven algorithms, and robotics. This shift has left even the most established “old-school” financial organizations struggling to keep up. The paradox of digitalization lies in its dual impact: while it creates new opportunities by automating routine tasks, increasing efficiency, and enhancing flexibility, it has also introduced an unprecedented level of cyber threats empowering fraud, theft, money laundering, and even terrorist financing, posing significant challenges for the industry.
These factors highlight the urgent need for the economic sector to develop an innovative and sustainable financial system that integrates best practices in management, analytics, reporting, strategy, and budgeting, alongside the latest digital tools, smart technologies, and applications. However, it is crucial to recognize that even minor transformations, if undertaken irresponsibly or without thoroughly considering all associated risks, can have catastrophic consequences and a significant negative impact on the global economy. The recent collapses of Silicon Valley Bank, Silvergate Bank, and Signature Bank serve as stark examples of how vulnerable U.S. financial institutions are to the consequences of ineffective financial and risk management.
Ather Mumtaz
To shed light on the impact of emerging developments in the field of financial operations, analytics, and management on the global market, businesses, and economic relations, we interviewed Asia’s leading expert in finance and investments, Ather Mumtaz. Ather gained international acclaim in the banking sector after successfully facilitating the establishment of the UAE’s first-ever hedge fund regulated by the Dubai Financial Services Authority, leading strategic and operational aspects for asset management, overseeing cooperation with regulatory authorities, and supervising mutual fund returns. He also led the establishment of several asset management companies under the auspices of the Central Bank of Bahrain and Abu Dhabi Islamic Bank branches in Sudan, Iraq, and Egypt, simultaneously managing settlement of mutual funds, corporate actions, and regulatory compliance in multiple jurisdictions across the world.
With over 23 years of experience driving digital transformations for major financial institutions in Saudi Arabia and the UAE, Ather has built his career leading the implementation of international strategic projects. These initiatives have included collaborations between the top-tier banks, focusing on digital transformation, financial management and analytics, compliance, as well as the development of protocols for financial crisis prevention and mitigation, and due diligence enforcement. Currently, Ather spearheads the finance division of SANABIL Investments, a multi-billion-dollar investment company in Saudi Arabia, widely recognized for his input in the development of regulatory compliance and digital transformation policies.
“The financial sector is evolving at an exponential pace, undergoing transformations that play a critical role in shaping global business and the economy,” shares Ather. “Increasing competition, rapidly changing business models that must adapt to even the slightest social shifts, and ever-rising expectations present significant difficulties in establishing an effective, sustainable, and consistently profitable financial management model.”
“The best way to address the multitude of challenges in the financial industry is to begin by identifying and analysing the most common mistakes made by inexperienced financial organizations,” he explains. “Many companies repeatedly make the same errors, such as weak financial strategies, failure to follow the strict compliance regulations, and omissions in financial planning and management. These mistakes can range from taking loans with too high interest rates to neglecting compliance stress testing procedures, and typically stem from a lack of attention to detail and a reluctance to go the extra mile to ensure all potential pitfalls are avoided.”
“Having spent many years managing multiple financial jurisdictions simultaneously, I’ve had numerous opportunities to witness firsthand the critical importance of anticipating risks and staying one step ahead”, expands Ather. “Surviving economic crises and handling emergencies requires developing multi-stage strategies, creating long-term plans that account for potential deviations from Plan A by including a robust Plan B, and implementing regular stress-testing protocols. These protocols help identify and address flaws in areas such as regulatory compliance, transparency in reporting, network reliability, and more.”
“When working with financial organizations to improve their performance, strategy, and financial management, I start from the ground up, conducting a comprehensive 360-degree analysis,” he shares. “This involves examining board policies, the company’s structure and products, financial statements, audit reports, applicable legislation, market demands within the industry, and many other unique factors. No company can excel without a multifaceted research and analysis of every detail. Thus, it is crucial to grasp all the intricacies of your niche to accurately assess your strengths, weaknesses, and role in the national economy.”
“It is also essential to cultivate the habit of prioritizing risk management through scenario analysis and the diversification of investments, operations, and revenue streams. This approach serves as the cornerstone for enhancing stability and safeguarding your organization against unforeseen events or force majeure situations”, states Ather. “Another crucial element is the incorporation of robotic processes and AI-powered applications. This is a must for meeting modern financial market demands, particularly in terms of navigating across different economic regulations and changes in compliance policies. Besides, automating routine tasks allows companies to save resources and free up employees’ time for more complex and strategic objectives, as well as provide more flexible solutions for clients.”
“I always recommend integrating AI-driven fraud detection algorithms and stress testing-based cybersecurity programs into the core of financial companies’ network systems”, he adds. “It substantially simplifies the task of processing and analysing large volumes of data while ensuring protection against cyber threats. Such stress testing algorithms are also an invaluable tool in regulatory compliance and cross-jurisdiction financial management. Their implementation is instrumental in assessing the resilience of your operational and financial systems, identifying any vulnerabilities, and implementing corrective actions in a timely manner.”
“Developing policies that ensure financial companies base their strategies on thorough research, analytics, innovation, and a deep understanding of regulatory compliance, AI integration, embracing Blockchain technology, cloud-based accounting, overcoming cyber security challenges, financial reporting, budgeting, and investment planning is key to preventing and mitigating financial crises,” concludes Ather. “Such policies enable us to enhance the stability, resilience, and efficiency of financial systems, contributing to the sustainable development of both national and international economies.”
