The algorithm is ready in financial services, but the data isn’t
The UAE’s financial sector is racing ahead on AI and automation. But according to Nicoleta Remmlinger, Director of 4most in the Middle East, the smartest institutions are asking a harder question first – is the data underneath it fit for purpose?
There is a version of this story that gets told a lot in financial boardrooms. An institution invests heavily in artificial intelligence, deploys a sophisticated model, and then discovers that the outputs are only as good as the inputs – which were never quite as clean, structured, or traceable as anyone assumed. The AI works, but the data, it turns out, did not.
This is not a technology failure. It is a data governance failure – and it is playing out across nearly every market that has raced toward digital transformation without first laying the regulatory data foundations that make it sustainable.
The UAE is no exception and that is both the challenge and the opportunity.
Ask any experienced risk professional what sits at the centre of every major regulatory transformation of the past two decades – Basel III, climate risk disclosure, AI governance, prudential supervision – and the answer is invariably the same. Not technology, not models – data.
The Basel Committee’s BCBS 239 principles on risk data aggregation, introduced after 2008, were a landmark recognition of this reality. Across jurisdiction after jurisdiction, regulators drew the same conclusion: the weakest link in financial risk management is almost never the sophistication of the model. It’s the quality, lineage, and governance of the data going into it.
The GCC has not yet produced an equivalent standard. This is not a criticism – it reflects the speed of the region’s modernisation and the sequencing of priorities that came with it. But the gap is narrowing. Whether through BCBS 239 or a locally calibrated framework, the direction of travel for the UAE is becoming clearer – and institutions that are not already building toward that standard will find themselves moving from a standing start.
A robust banking infrastructure
The UAE’s financial sector has achieved something genuinely remarkable. In years rather than decades, it has built sophisticated banking infrastructure, embraced open finance, and attracted global institutions. The Central Bank’s 2024 Financial Stability Report confirmed strong capital and liquidity buffers well above regulatory minimums, with sustained credit growth throughout the year.
That trajectory is real. So is the underlying tension.
When institutions industrialise AI before institutionalising data governance, the sequencing creates risk. It is technically possible to learn to swim before learning to walk – exceptional outcomes are not impossible. But the journey becomes less predictable and significantly harder to audit. When a regulator asks for traceability, the answer cannot be “trust the model”.
Data governance
What makes the UAE’s current phase distinctive is not just the pace of change, but who is driving it. In a growing number of UAE financial institutions, internal audit functions are becoming active stakeholders in data regulatory automation projects – challenging governance models before implementation, assessing data lineage, and influencing design from the outset. They are no longer arriving after the fact.
That shift matters because it signals that financial institutions are beginning to treat regulatory data management not as an IT responsibility, but as a strategic governance discipline involving risk, finance, compliance, and executive leadership simultaneously.
Several developments make this moment particularly important. The anticipated evolution toward Internal Ratings-Based approaches to credit risk will demand granular historical datasets and model traceability that many institutions are only beginning to build toward.
Federal Decree-Law No. 6 of 2025 – the most sweeping overhaul of the UAE’s financial regulatory architecture in years – expands the Central Bank’s supervisory perimeter, raises maximum fines tenfold to AED 1 billion, and embeds ESG principles into the regulator’s core mandate.
Each of these leads to the same place – an institution’s ability to demonstrate data quality and governance under scrutiny.
From compliance to a driver of AI
The most important reframe happening in progressive UAE institutions is that data governance is no longer a cost of compliance, it is a driver of profitability. Better data enables better pricing, better risk calibration, better fraud detection, and better capital optimisation. Trusted data is the asset on which every other competitive advantage depends.
The next phase of the UAE’s financial evolution may well be defined not by the sophistication of its algorithms, but by the integrity of the data those algorithms run on. Build that first.
