Finance

Morgan Stanley is expanding the use of OpenAI-powered generative AI tools to its vaunted investment banking and trading division, CNBC has learned.
The firm began testing a version of an AI assistant based on OpenAI’s ChatGPT, called AskResearchGPT, this summer in its institutional securities group, according to Katy Huberty, Morgan Stanley’s global director of research.
Employees have been using it instead of getting on the phone or lobbing an email to the research department, Huberty said.

A screen displays the trading information for Morgan Stanley on the floor of the New York Stock Exchange (NYSE), January 19, 2022.
Brendan McDermid | Reuters

Morgan Stanley is expanding the use of OpenAI-powered, generative artificial intelligence tools to its vaunted investment banking and trading division, CNBC has learned.
The firm, which first rolled out an AI assistant based on OpenAI’s ChatGPT technology to its wealth management advisors in early 2023, began testing another version called AskResearchGPT this summer in its institutional securities group, according to Katy Huberty, Morgan Stanley’s global director of research.

The tool lets users extract answers from across the universe of Morgan Stanley’s research — including on stocks, commodities, industry trends and regions — collapsing what could otherwise be the cumbersome task of gleaning insights from the over 70,000 reports produced annually by the bank.
“We see it as a game changer from a productivity standpoint, both for our research analysts and our colleagues across institutional securities,” Huberty said in an interview. The tool helps staff “access the highest quality, most insightful information as efficiently as possible.”
Since its arrival as a viral consumer app in late 2022, OpenAI’s generative AI technology has been swiftly adopted by Wall Street’s largest players.
Morgan Stanley says that close to half of its 80,000 employees are using generative AI tools created with OpenAI, while at rival JPMorgan Chase, about 60% of the firm’s 316,043 employees have access to a platform using OpenAI’s models, said a person with knowledge of the matter. The San Francisco-based startup recently raised money at a $157 billion valuation.
At Morgan Stanley, a leader across investment banking and trading along with JPMorgan and Goldman Sachs, employees have gravitated toward AskResearchGPT, using it instead of getting on the phone or lobbing an email to the research department, Huberty said.

Employees are asking the tool three times the number of questions as compared to a previous tool based on traditional AI that’s been in use since 2017, according to the bank.
It’s most in-demand among salespeople and other client-facing staff who often send research highlights and field questions from hedge funds or other institutional investors, said Huberty.
“We found that it takes a salesperson one-tenth of the time to respond to the average client inquiry” using AskResearchGPT, she said.
In a recent demonstration, the GPT-4 based chatbot was able to summarize Morgan Stanley’s position on matters from copper to Nvidia to the finer points of standing up a data center, understanding industry-specific jargon and providing charts and links to source material.
The bank wants to push adoption further in light of the productivity gains it’s seeing, Huberty said. The tool is embedded within workers’ browsers as well as Microsoft Teams and Outlook programs to make it readily available.
Understandably, Huberty says she is often asked if AI could ultimately replace the analysts who are creating the reams of research published under Morgan Stanley’s banner.
“I don’t see in the near future a path to just having the machine write the research report to generate the idea,” she said. “I really think that it’s humans who make the call and own the relationship, which is a really important part of the analyst job, or sales and trading job, or corporate banker job.” More

Honor, a spinoff from Huawei that focuses on higher-end devices, revealed Wednesday the latest version of its Android-based Magic operating system would focus on AI as an assistant.
Telecommunications giant Huawei on Tuesday launched an upgrade to its HarmonyOS system that uses in-house AI to allow users to translate text, take notes and edit photos.
Apple fell out of the top five smartphone players in China earlier this year, according to Canalys.

Chinese smartphone company Honor on Wednesday revealed new AI features. Pictured here is CEO George Zhao speaking in Shanghai on June 26, 2024.
Nurphoto | Nurphoto | Getty Images

Honor, a spinoff from Huawei that focuses on higher-end devices, revealed Wednesday the latest version of its Android-based Magic operating system would focus on AI as an assistant.
A company demo showed how even with a vague voice command — such as “I’m tired, order something” — the phone was able to automatically order coffee without requiring the user to touch the device. It used AI to mimic actions on a touchscreen. Human intervention was only needed to complete the payment.

The AI assistant could also identify documents and send them to contacts, or make calls via social media app WeChat, all without requiring the user to touch the phone.
For devices in China, Honor works with Baidu and other Chinese companies for some AI functions, while developing others on its own. Honor works with Google for devices sold overseas.
The new AI features are slated for release on Honor’s forthcoming Magic 7 smartphone, due for launch on Oct. 30. Honor plans to roll out AI capabilities to all its devices by the first few months of next year.
The Magic 7 will use Qualcomm’s newly announced Snapdragon Elite 8 chip for phones. Honor on Monday had teased its new AI features at the chipmaker’s annual event.
Chinese home appliance and smartphone company Xiaomi will also launch a new phone this month that uses Qualcomm’s Snapdragon Elite 8 chip. Xiaomi has been less vocal about its AI features for smartphones.
The AI features have climbed to a new level, Toby Zhu, senior analyst, Canalys, said in a phone interview Wednesday after Honor’s event. He said the new features have greater potential to convince consumers to switch to another device.
“Apple faces challenges in China but from our data it won’t face a significant decline,” he said in Mandarin, translated by CNBC.

Apple’s falling China sales

Honor, Xiaomi and Huawei have all launched foldables, a category Apple has yet to enter.
About 17% of Apple’s revenue came from Greater China in the quarter ended June 29. That’s down from 19% in the year-ago period. Apple is scheduled to release quarterly results on Oct. 31 local time.
Apple CEO Tim Cook met with China’s Minister of Industry and Information Technology Jin Zhuanglong on Wednesday to discuss data security and cloud services, according to the ministry. Apple did not immediately respond to a CNBC request for comment.
Since launching on Sept. 20, Apple’s iPhone 16 Pro Max has dropped slightly in value on second-hand shopping platform Xianyu. The device was selling between 8,000 Chinese yuan ($1,122) and 10,000 yuan Wednesday, compared with 10,500 yuan to 16,300 yuan last month.
Huawei had launched its trifold Mate XT on the same day. As of Wednesday, second-hand prices for the device had dropped to the mid-20,000 yuan range, nearly half the price it was selling for on Sept. 20.
— CNBC’s Dylan Butts and Sonia Heng contributed to this report. More

Dante Disparte, Circle’s global head of policy, said that he sees the U.K. bringing in legislation for stablecoins, a type of cryptocurrency pegged to government currencies, soon.
“I think we’re within months, not years” of formal U.K. laws for the stablecoin market being introduced, Disparte told CNBC in an interview last week during a visit to London.
He added that the U.K. has some catching up to do with the European Union, which has begun enforcing regulation of stablecoins under its MiCa, or Markets in Crypto Assets, regulation.

Launched in 2018 by crypto firm Circle, USDC is now the second-biggest stablecoin globally, with more than $30 billion worth of tokens in circulation.
Nurphoto | Getty Images

LONDON — The U.K. is likely to see stablecoin laws introduced in a matter of “months, not years,” according to crypto firm Circle’s top policy executive.
Dante Disparte, Circle’s global head of policy, said that he sees the U.K. will soon bring in legislation for stablecoins, a type of cryptocurrency that aims to maintain a constant peg to government currencies such as the U.S. dollar or British pound

“I think we’re within months, not years” of formal laws for the stablecoin market being introduced, Disparte told CNBC in an interview last week during a visit to London.
The Treasury and the Bank of England were not immediately available for comment when contacted by CNBC.
Disparte suggested the U.K.’s lengthier approach to introducing laws targeted at crypto may have been a good thing given events that transpired in 2022, such as the collapse of FTX, a crypto exchange once worth worth $32 billion, as well as other industry crises.

“You could also look back, and I think many in the U.K. and in other countries would argue that they’re vindicated in not having jumped in too quickly and fully regulating and bringing the environment onshore because of all the issues we’ve seen in crypto over the last few years,” Disparte said.
However, he added that more recently, there’s been a sense of urgency to introduce formal regulations for stablecoins, as well as trading in digital assets and other crypto-related activities.

By not bringing forth stablecoin-specific rules, the U.K. would risk missing out on the benefits of the technology. He added that the U.K. has some catching up to do with the European Union, which has begun enforcing regulation of stablecoins under its MiCa, or Markets in Crypto Assets, regulation. Singapore has also agreed formal laws for the stablecoin industry.
“In the spirit of protecting the U.K. economy from excess risk and crypto, there’s also a point in time in which you end up protecting the economy from job creation and the industries of the future,” Disparte said. He stressed that “you can’t have the economy of the future unless you have the money of the future.”
Among the benefits cited by Disparte are innovation in the wholesale banking industry, real-time payments, and the digitization of the British pound.
Officials at the Bank of England are currently exploring whether or not to introduce a digital version of the pound, which has previously been dubbed “Britcoin” by the media.

Dante said he had met with officials from the Bank of England recently and was reassured by their approach to so-called central bank digital currencies, or CBDCs.

What has the UK done so far?

Prime Minister Keir Starmer’s predecessor, Rishi Sunak, had previously envisioned Britain becoming a global crypto hub.
When the Conservative Party was in power, U.K. government officials had signaled that new legislation for stablecoins as well as crypto-related services such as staking, exchange and custody would be in place as early as June or July.
In April, the former government announced plans to become a “world leader” in the crypto space, outlining plans to bring stablecoins into the regulatory fold and consult on a regime for regulating trading of cryptoassets, like bitcoin.
Last October, Sunak’s administration issued a response to a consultation on regulation of the crypto industry, saying it would aim to introduce “phase 2 secondary legislation” in 2024, subject to parliamentary approval.
The new Labour government hasn’t been as vocal as the Conservatives were on crypto regulation. In January, the party released a plan for financial services, which included a proposal to make the U.K. a securities tokenization hub.

Securities tokens are digital assets that represent ownership of a real-world financial asset, such as a share or bond.
Stablecoins are a multibillion industry, worth more than $170 billion, according to CoinGecko data. Tether’s USDT token is the largest stablecoin by value, with a market capitalization of over $120 billion. Circle’s USDC is the second-largest, with the combined value of coins in circulation worth over $34 billion.
However, the market has been shrouded in controversies in the past. In 2022, Tether’s USDT dropped from its $1 peg after a rival stablecoin, terraUSD, collapsed to zero. The events raised doubts over whether USDT was truly backed 1:1 by an equal amount of dollars and other assets in Tether’s reserves.
For its part, Tether says its coin is backed by dollars and dollar-equivalent assets, including government bonds, at all times. More

Less than a mile from Singapore’s luxurious Changi Airport sits a rather less glamorous business park. Residents of the industrial estate include freight and logistics firms, as well as the back offices of several banks. One building is a little different, however. Behind a glossy onyx facade, layers of security and imposing steel doors, sits more than $1bn in gold, silver and other treasures. Reserve SG hosts dozens of private vaults, thousands of safe deposit boxes and a cavernous storage room where precious metals sit on shelves rising three storeys above the ground. More

Christian Klein, head of German software giant SAP, says Europe risks falling behind the U.S. and China if it ends up overregulating the AI sector.
“If you only regulate technology in Europe, how can our startups here in Europe … compete against the other startups in China, in Asia, in the U.S.?” Klein said.
Instead, he argues businesses need a more harmonized, pan-European approach to pressing issues like the energy crisis and digital transformation — and less regulation overall, not more.

Christian Klein, Co-CEO of German software and cloud computing giant SAP, speaks during a press conference to present SAP’s financial results for 2019 on January 28, 2020 in Walldorf, southwestern Germany. – German software giant SAP reported a bottom line undermined by heavy restructuring costs, but lifted forecasts for the year ahead.
Daniel Roland | AFP | Getty Images

Europe should avoid regulating artificial intelligence and focus its attention on the results of the technology instead, the CEO of German enterprise tech giant SAP told CNBC Tuesday.
Christian Klein, who has held the top job at SAP since April 2020, said Europe risks falling behind the U.S. and China if it overregulates the AI sector.

While it’s important to mitigate the risks associated with AI, Klein argued that regulating the tech while it’s still in its infancy would be misguided.
“It’s very important that how we train our algorithms, the AI use cases we embed into the businesses of our customers — they need to deliver the right outcome for the employees, for the society,” Klein said on CNBC’s “Squawk Box Europe” Tuesday.
“If you only regulate technology in Europe, how can our startups here in Europe, how can they compete against the other startups in China, in Asia, in the U.S.?” Klein added.
“Especially for the startup scene here in Europe, it’s very important to think about the outcome of the technology but not to regulate the AI technology itself.”

Instead, Klein argued, businesses need a more harmonized, pan-European approach to pressing issues like the energy crisis and digital transformation — and less regulation overall, not more.

Upbeat earnings

His comments came after SAP reported bumper third-quarter earnings late Monday. Shares of the software vendor jumped more than 4% to a record high.
The software giant posted total revenue of 8.5 billion euros ($9.2 billion) for the quarter, up 9% year-over-year as sales related to cloud products jumped 25%.
SAP raised its 2024 outlook for cloud and software revenue, operating profit and free cash flow. The German firm has been working toward a transition to cloud computing over the last decade.
In 2016, SAP acquired Concur, the business travel and expenses platform, in a bet that software would move to the cloud.
More recently, SAP has made AI a big focus of its strategy as it looks to reposition itself for faster growth after higher interest rates and macroeconomic headwinds dented tech spending and led to industry-wide layoffs.
In January, SAP announced a restructuring plan affecting over 7% of its global workforce — or the equivalent of 8,000 roles. More

Alumni from Klarna have gone on to create 62 new startups — more than any other fintech unicorn in Europe, according to a new report from venture capital firm Accel.
Out of 98 venture-backed fintech unicorns in the region, 82 have produced 635 new tech-enabled startups, according to Accel’s report.
Accel labels these companies “founder factories,” on the basis that they have become breeding grounds for talent that often go on to establish their own firms.

Buy now, pay later firms like Klarna and Block’s Afterpay could be about to face tougher rules in the U.K.
Nikolas Kokovlis | Nurphoto | Getty Images

LONDON — More startups are being spun out of Swedish digital payments firm Klarna than any other financial technology unicorn in Europe, according to a new report from venture capital firm Accel.
Accel’s “Fintech Founder Factory” report shows that alumni from Klarna have gone on to create a total of 62 new startups, including the likes of Swedish lending technology firm Anyfin, regulatory compliance platform Bits Technology and AI-powered coding platform Pretzel AI.

That is more than any other venture-backed fintech startup worth $1 billion or more in the region.
This includes the digital banking app Revolut, whose former employees have founded 49 startups. It also includes money transfer app Wise and online-only bank N26, where ex-staff at both firms have started 33 companies each, according to Accel’s data.

‘Founder factories’

Accel labels these companies “founder factories,” on the basis that they have become breeding grounds for talent that often go on to establish their own firms.

“We now have a very long list of large, durable, successful companies in Europe across the different ecosystems — including London, Berlin and Stockholm — that have been generating interesting outcomes,” Luca Bocchio, partner at Accel, told CNBC.
Out of 98 venture-backed fintech unicorns in Europe and Israel, 82 have produced 635 new tech-enabled startups, according to Accel’s report, which was published Tuesday ahead of a fintech event the firm is hosting in London Wednesday.

The data also factors in fintech unicorns based in Israel. However, most of the biggest fintech founder factories come from Europe.

Klarna’s workforce reduction

Klarna has attracted headlines in recent months due to commentary from the buy now, pay later giant’s founder and CEO, Sebastian Siemiatkowski, about using artificial intelligence to help reduce headcount.

Klarna, which currently has a company-wide hiring freeze in place, cut its overall employee headcount by roughly 24% to 3,800 in August this year. Siemiatkowski has said that Klarna was able to reduce the number of people it hires thanks to its implementation of generative AI.
He is looking to further reduce Klarna’s headcount to 2,000 employees — but has yet to specify a time for this target.
Klarna’s ability to produce so many new startups had little to do with cutbacks at the company or its focus on using AI to boost worker productivity and hiring less people overall, according to Accel’s Bocchio.
Asked about why Klarna topped the ranking of fintech founder factories in Europe, Bocchio said: “Klarna is an organization that is coming of age now.”
That means it is currently “well positioned to produce interesting founders,” Bocchio added — both because it’s large and has been around for a long time, and because of the “interesting” ways its staff work internally.

Staying close to home

Another notable finding from Accel’s report is that most companies founded by former fintech unicorn employees tend to do so in the same cities and hubs their employer was founded in.
Nearly two-thirds (61%) of companies founded by former employees of fintech unicorns were founded in the same city as the unicorn, according to Accel.
More broadly, the numbers show that Europe is seeing a “flywheel effect,” according to Bocchio, as tech firms are scaling to such a large size that staff can take learnings from them and leave to set up their own ventures.
“I think the flywheel is spinning because that talent is remaining inside the flywheel. That talent is not going anywhere.” This, he said, “speaks to the maturity and appetite” of individuals within Europe’s fintech founder factories. “We expect this trend to continue. I don’t see any reason why it should stop.” More

HSBC has unveiled a major overhaul, announcing a new geographic setup, consolidated operations and a new CFO — the lender’s first female finance chief.
This is the second heavyweight leadership shakeup for HSBC in recent months, after former finance boss Georges Elhedery was named CEO of the group back in July.
The bank also announced plans to restructure into four divisions: Hong Kong, U.K., international wealth and premier banking, and corporate and institutional banking.

Aaron P | Bauer-Griffin | GC Images | Getty Images

HSBC on Tuesday unveiled a new geographic setup and consolidated its operations into four business units, amid a key overhaul that delivered the lender’s first female finance chief.
The bank’s shares were flat in early London trade Tuesday. The U.K.-listed stock is up more than 6% over the year-to-date.

As part of the restructuring outlined in regulatory filings with the Hong Kong bourse, HSBC plans to divide its operations between an “Eastern markets” branch, reuniting Asia-Pacific and the Middle East, along with a “Western markets” division, comprising the non-ringed-fenced U.K. bank, the continental European business and the Americas.
Chinese insurer Ping An, HSBC’s largest shareholder with a more-than-9% stake, has previously campaigned for the spinoff of HSBC’s Asian business from the rest of the group’s operations — although this was ultimately rejected during the bank’s annual general meeting last year.
The bank on Tuesday also announced plans to streamline its businesses in a bid to “reduce the duplication of processes and decision making.” From January, it will operate through four divisions: Hong Kong, U.K., international wealth and premier banking, and corporate and institutional banking.
“The new structure will result in a simpler, more dynamic, and agile organisation as we focus on executing against our strategic priorities, which remain unchanged,” Elhedery said Tuesday in a statement, adding that the shakeup will help propel HSBC in its “next phase of growth.”
The bank’s new corporate and institutional banking unit will bring together its commercial banking business (outside of Hong Kong and the U.K.), global banking and markets business, and Western markets wholesale banking operations.

UBS analysts said the magnitude of the required restructuring was currently “unknown and important.”
“Aligning functions for a group with 213,978 staff involves exceptional costs, a divisional shift provides the opportunity for new CEO cost reductions,” they wrote in a Tuesday note entitled “Simpler, faster, better?”.
“Also important is whether this structure will prompt other changes: for example, (i) where does Australian retail (65% of loans are [residential] mortages) fit in this structure? (ii) is insurance manufacturing key to international wealth? and (iii) does HSBC need a bigger corporate Latam presence?”

Change at the top

Like many European lenders, HSBC has benefitted from a high interest rate environment since the Covid-19 pandemic, but now faces the loss of that support after the European Central Bank started loosening monetary policy in June.
Back in July, HSBC posted estimates-beating pretax profit of $21.56 billion in the first half of the year, announcing a share buyback program of up to $3 billion. The bank is set to next report its financial results on Oct. 29.
Earlier this month, the Financial Times reported that Elhedery was targeting the bank’s senior management as part of cost-cutting restructuring plans that could save as much as $300 million.
Amid the managerial overhaul announced Tuesday, HSBC said Pam Kaur — currently group chief risk and compliance officer — will assume the CFO post on Jan. 1, taking over from interim Chief Financial Officer Jon Bingham.
This is the second heavyweight leadership shakeup for HSBC in recent months, after former finance boss Georges Elhedery was named CEO of the group back in July. More

Residents of Beirut are, by now, used to warnings from the Israel Defence Forces ahead of bombing runs. Typically, these instruct locals to stay away from a tower block suspected of harbouring fighters, or perhaps a school said to double as a weapons cache. The warning on October 20th was a little different. It told people to steer clear of branches of al-Qard al-Hassan (AQAH), a bank. More