UAB Magazine Issue October 2026

83 Study Union of Arab Banks - October - 2026 Practical Priorities for Bank Management The first priority is governance, where boards and senior management should understand which digital-asset and AI activities thebankundertakes,why theyarebeing introduced, and whether the institution has the expertise and resources to manage them safely. The second is risk assessment. Before launching a product or adopting a new system, banks should examine its legal implications, customer impact, cybersecurity exposure, data requirements, and dependence on third-party providers. The third is investment in people and systems. Compliance professionals need training in digital assets, stablecoin transactions, and AI-related risks. Technology teams, in turn, need a clear understanding of regulatory expectations and the bank's risk appetite. The fourth is testing and accountability. AI systems should be assessed before deployment and monitored after implementation. Stablecoin-related services should be reviewed for redemption, counterparty, and transaction risks. Digital-asset activities should be subject to clear controls and appropriate independent review. Finally, banks should engage with regulators and international partners early. Waiting until a product is launched or a correspondent raises concerns can make the cost of adjustment much higher. Conclusion Digital assets, stablecoins, and AI offer Arab banks opportunities to improve payments, strengthen risk management, and develop new financial services. They also create risks that cannot be managed through technology alone. The U.S. regulatory developments are especially relevant where banks rely on dollar transactions, engage with U.S.-linked service providers, or serve customers whose activities bring them within applicable U.S. rules. Yet the broader lesson extends beyond the United States: financial innovation requires clear accountability, reliable information, and controls that keep pace with changing business models. For theArab banks, the goal should not be to adopt every new technology as quickly as possible, nor to avoid innovation altogether. It should be to identify where new tools offer genuine value, understand the risks they introduce, and establish appropriate safeguards before expanding their use. Banks that achieve this balance will be better positioned to maintain the confidence of customers, regulators, and international partners. In the evolving world of digital finance, innovation may create the opportunity, but trust will determine whether that opportunity can be sustained. General Secretariat – Research Department