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November 16, 2023

Migration to rich countries at all time high

International migration to rich countries reached an all-time high last year, driven by global humanitarian crises and demand for workers, the OECD said on Monday.

The Paris-based organisation estimated 6.1mn new permanent migrants moved to its 38 member countries last year, 26% more than in 2021 and 14% higher than in 2019, before the pandemic brought an enforced pause to much cross-border movement.

Preliminary figures for 2023 suggested a further increase, the OECD said, indicating that last year’s surge was not solely a post-Covid rebound.

This total did not include a further 4.7mn displaced Ukrainians who were living in OECD countries as of June this year; an increase in temporary migration for work; or a record 1.9mn permits issued to international students — with the greatest number of new students going to the UK.

Both humanitarian and labour-related flows of people look set to continue at high levels, with the latter accounting for a growing share of total migration, driven by a widespread scarcity of workers, the OECD said.

“Most OECD countries are experiencing #labour shortages,” José Luis Escrivá, the Spanish minister responsible for migration, said at the launch of the OECD’s report. “The situation can only get worse in future.”

Simply to stabilise its population, given demographic trends, the EU would need at least 50mn people to come from abroad in the next 25 years, Escrivá said, adding that this created “an absolute need” for significant migration “simply for the maintenance of the welfare state”.

Humanitarian migration to Germany and the US — the top two countries for granting asylum — nearly doubled in 2022, with the largest numbers of applications coming from Venezuela, Cuba, Afghanistan and Nicaragua.

Labour migration through routes that could lead to permanent settlement reached a 15-year high in many countries, the OECD said, including a doubling in the UK. There was a rise of 59 per cent in Germany, 39 per cent in the US and 26 per cent in France. Inflows to New Zealand, meanwhile, were triple the previous record, owing to a one-off policy allowing temporary residence to labour-seeking migrants.

This offset the slower post-pandemic recovery in flows of workers within the EU’s free movement area, and between Australia and New Zealand, and meant labour-related migration now accounted for more than a fifth of cross-border movement, the OECD said.

The migrant employment rate reached its highest on record, with more than 70% in work and fewer than 8% unemployed — in many countries, beating the employment rate of domestic worers.

https://www.ft.com/content/e1cabc36-d050-4674-a16c-fff60c548174?accessToken=zwAGCGh4LrG4kdPhyrw20FBGdNOhbP_2DFSBdA.MEYCIQCUYC025XVgdBGN_EHcqe6uasK-hOm-nfLknFhDQxR0nQIhAMwtMX3bScGJRx5Fc6tXz_RKmUymTAxBhcI05mIeGr3Q&sharetype=gift&token=d137e5a8-5904-40c6-b8f4-6deece95f4b3

October 09, 2023

AI in Finance: Overcoming Hurdles for Transformation

Generative AI holds the potential to help financial services firms re-imagine their entire businesses around the needs and desires of their customers.

There are several areas where generative AI can help firms dramatically improve their operations.

First hurdle: Generative AI poses unique risks that traditional AI systems don’t have to contend with. One is defamation: programs inadvertently producing defamatory content. Another is hallucinations and opaque logic and processing. Generative AI also creates confidentiality concerns such as data leakage and copyright issues. To address these, financial institutions need to beef up their governance, data quality, talent functions and other dimensions.

Second hurdle: regulators. The potential perils of AI span the enterprise, including operations, technology, legal, compliance, process, data, technology and reputational risks. Banks need an enterprise-wide framework to holistically manage these risks. Government bodies have offered guidelines on best practices in the US, the EU, the UK and Hong Kong. When these guidelines turn into hard rules, we estimate fines for lack of governance could approach 6% of the industry’s global revenue.

Third hurdle: the technology itself. Today’s models lack desires and self-directed learning. They have extensive knowledge of the world, but don’t “know what they know,” and lack any sense of truth. As for reasoning, models’ abilities remain brittle and likely to fail unexpectedly, especially when asked to apply logic and knowledge in new contexts. And they don’t yet offer predictability, with unwanted outputs creeping into models frequently.

As a result, significant productivity improvements from generative AI will take time. Learning curves are steep, there is still insufficient scale of adoption, and model tweaks and redesigns have been slow. Firms must navigate a collision course: In one direction, ongoing advancements are likely to drive more widespread use as tools become integrated into our daily lives.

https://www.oliverwyman.com/our-expertise/insights/2023/sep/ai-can-transform-finance.html

At Loquat we believe in the transformative power of AI in finance.

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