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Whoever arranged the timing of the Dubai Fintech Summit could hardly have chosen a more dramatic moment to assemble the world’s financial technology enthusiasts.
The DIFC-organised gathering – part of Dubai Future Finance Week – opened just days after a sharp sell-off in US technology stocks raised fresh questions about the sustainability of the artificial intelligence boom. More alarmingly, it followed the biggest financial heist in history: the theft of $6.3 billion in cryptocurrency from Binance.
Both developments featured in the discussions at the summit, though the conversations around the Johara ballroom in Madinat Jumeirah, which served as headquarters for the event, were rather more candid than some of the proceedings on stage.
The official message was one of confidence. AI would transform financial services, fintech innovation would accelerate, and Dubai was ideally positioned to capitalise on both.
But away from the microphones, industry insiders acknowledged some uncomfortable realities. The Binance attack would not be the last, several suggested. Indeed, the next could be worse.
Binance has strong links with the Gulf. Abu Dhabi investors were among the most prominent in its capital-raising stages, it has offices in Abu Dhabi’s ADGM, and its co-CEO Richard Teng spent a long time as regulator for the capital’s financial centre.
Teng, incidentally, was due to be on stage at DFS, but was understandably called away on urgent business.
The extraordinary scale of the theft deserves emphasis. Hackers made off with an estimated $6.3 billion in digital assets, much of it in just 20 minutes, exploiting vulnerabilities in the infrastructure used to authorise transactions.
The FBI has attributed the attack to a North Korean state-sponsored hacking group, raising the disturbing prospect that cryptocurrency exchanges have become targets not merely for sophisticated criminals but for governments seeking financial gain or geopolitical advantage.
Binance has pledged to cover the losses from its own resources, but the episode has raised questions about the security of an industry whose central promise is to make financial transactions faster, cheaper and more accessible.
The technology that promises to make finance more efficient could also equip attackers with more sophisticated tools
There was sympathy in Dubai for Binance founder Changpeng Zhao, universally known as CZ, and for Teng. But sympathy does not eliminate the underlying problem.
Cryptocurrency exchanges are particularly attractive targets because they hold vast quantities of assets that can be transferred almost instantaneously across borders. Their technological sophistication is both their greatest strength and a potential weakness.
Nor are the risks confined to crypto. Digital banks, payment providers and other fintech businesses depend on complex software systems, third-party technology and interconnected networks. A vulnerability in one part of that infrastructure can have consequences far beyond the original target.
In the Gulf’s febrile security environment, the implications are especially troubling. Cyberattacks have become another weapon in the arsenal of state-sponsored conflict, potentially threatening financial infrastructure as well as conventional military and economic targets.
The technology that promises to make finance more efficient could also equip attackers with more sophisticated tools. Innovation and vulnerability, it seems, are advancing together.
The other shadow over the summit was the turbulence in US technology stocks, where investors have begun questioning whether the enormous sums being committed to AI will generate adequate returns.
There was little evidence of similar anxiety in Dubai.
The UAE has committed to becoming a global leader in artificial intelligence, investing heavily in infrastructure, expertise and the commercial applications of the technology.
Omar Sultan Al Olama, the UAE’s minister of state for artificial intelligence, made clear in a summit fireside conversation that nothing would deflect that ambition.
“No short-term turbulences are going to affect our long-term thinking,” he declared.
He acknowledged that emerging technologies experience booms and busts, but remained convinced that AI would fundamentally transform economies and societies.
Believing in the transformative potential of artificial intelligence is not the same as believing that every company associated with it deserves an astronomical stock market valuation.
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The internet survived the dotcom crash and went on to transform the global economy. There is every reason to believe AI can follow a similar trajectory, even if some investors suffer along the way.
Dubai’s confidence in its technological future is understandable, and its determination to maintain investment through difficult times has served it well before.
But the Binance disaster offers a reminder that the financial technology revolution carries risks that cannot be wished away by enthusiasm or investment.
The challenge for Dubai, and for the wider fintech industry, is no longer simply to innovate faster than its competitors.
It is to ensure that the resulting financial system is secure enough to deserve the confidence being placed in it.
Frank Kane is Editor-at-Large of AGBI and an award-winning business journalist
