The AI-gold rush seen from the financial sector
In this Fund Update from DNB Fund Financials, we discuss why the financial sector remains relevant for investors, and how AI, interest rates, and structural changes are affecting future return opportunities.
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AI and the capital markets lift activity
Host Jorgen Mork meets with the managers Kjell Morten Jørnevik and Knut Bakkemyr from the equity fund DNB Finance.
Despite a weak first half – where the financial sector is down about 2 percent while global equities are up nearly 5 percent – a clear long-term outperformance is indicated. AI investments drive increasing capital needs, with significant growth in issuances and bond offerings. This particularly benefits investment banks and capital market activity.
Winners in the AI age
Companies with scale, data access, and technological capacity are highlighted as likely winners. At the same time, AI can contribute to efficiency and lower costs across the sector. A key point is that adaptability – not necessarily size alone – determines who succeeds. New digital banks like Nubank show how AI-native players can challenge established ones.
Crypto and developing payment infrastructure
Tokenization and blockchain elements can make financial transactions faster and cheaper, especially across borders. Stablecoins are expected to grow significantly, but are still estimated to constitute a limited part of banks' deposit bases. Overall, the impact on banks' core earnings is considered manageable.
Structural drivers support the sector
Normalization of interest rates, less regulatory headwinds, and attractive valuations are highlighted as three key drivers. Additionally, increased M&A activity is expected, particularly in insurance. Peace initiatives and lower energy prices may also contribute positively through higher economic growth. In conclusion, the managers delve deeper into how these trends affect portfolio positioning and which segments they see the greatest potential in going forward.
Learn more about the DNB Financials equity fund.
