Why Multilateral Organizations Must Evolve By Embracing AI And Blockchain – Analysis

Multilateral organizations were designed for the analog era, with operating models focused on paper-based transactions, siloed information systems and governance processes that promote deliberation rather than speed. Given today’s accelerating plethora of crises, fiscal constraints, excessive politicization and public scrutiny, these features have become liabilities. Long-standing critiques of inefficiency, slow disbursements, opaque administrative processes and sub-standard implementation rates have pushed multilaterals to explore whether AI and blockchain can help modernize how they operate.

Transforming financial operations: the role of blockchain and AI in international development

At the World Bank, this shift is most visible in efforts to digitize and secure financial flows. In 2025, the Bank announced the rollout of FundsChain, a blockchain-based platform designed to track project funds on distributed ledgers, enabling near-real-time visibility into how resources move from headquarters to implementing agencies and beneficiaries. By replacing fragmented reporting systems with a single tamper-resistant record, FundsChain aims to reduce reconciliation delays, limit opportunities for misuse, and simplify auditing across complex, multi-country projects. While still evolving, the initiative reflects a serious attempt to use blockchain to streamline core financial operations.

In tandem with blockchain, the World Bank has expanded its use of AI to support policy advice, project design and governance diagnostics. Through initiatives such as its Governance Innovation Lab, machine-learning tools analyze large datasets on procurement risks, public-sector performance and service-delivery outcomes. These tools allow staff to identify patterns and anomalies that traditional analysis might miss, improving project targeting and reducing costly design errors before funds are committed.

The Asian Infrastructure Investment Bank (AIIB) made a notable breakthrough in capital markets by issuing its first digitally native note(a form of digital bond) in August 2024, raising $300 million on Euroclear’s Digital Financial Market Infrastructure platform using distributed ledger technology (DLT). This issuance — the first US-dollar-denominated digital bond on Euroclear’s DLT system and the first by an Asia-based issuer — was backed by a triple-A credit rating and listed on the Luxembourg Stock Exchange, with clearing available through the Hong Kong Monetary Authority’s Central Moneymarkets Unit and the SIX Swiss Exchange, demonstrating how established financial market infrastructure can support broader adoption of blockchain-enabled securities.

The UN system has explored these technologies, though adoption varies widely across agencies. Blockchain pilots have been deployed in humanitarian contexts to support cash transfers, digital identity solutions and supply-chain tracking in fragile settings. To coordinate experimentation, the UN Innovation Network was created to promote knowledge sharing across agencies. AI is increasingly being applied to trade facilitation, climate-risk analysis and early warning systems, where rapid synthesis of large data streams is essential. In these areas, AI has shown promise in reducing manual workloads while improving the timeliness of analysis.

Challenges to AI and blockchain integration in multilateral organizations

Despite such progress, overall efficiency gains from AI and blockchain remain limited among the multilaterals. One persistent obstacle is data quality and interoperability. AI systems depend on clean, standardized and timely data, yet many multilateral organizations rely on legacy IT architectures that do not communicate effectively. Without interoperable data systems, AI tools remain confined to narrow use cases. Similar challenges have been observed in the private financial sector, where siloed data is a leading barrier to effective AI adoption.

Governance concerns also slow progress. AI raises questions about transparency, bias and accountability — particularly when algorithmic tools influence funding decisions or policy advice. At the International Monetary Fund’s 2025 Annual Meetings, policymakers emphasized the need for shared international standards to ensure AI adoption does not undermine trust or exacerbate inequality. Blockchain presents parallel challenges, including questions over control of permissioned networks, legal accountability, alignment with existing oversight frameworks and similar concerns. Scholars have warned that poorly designed blockchain systems could weaken institutional legitimacy rather than strengthen it.

Internal capacity constraints further limit adoption. Many multilateral organizations lack sufficient in-house expertise in data science and distributed systems, relying instead on consultants. Combined with risk-averse institutional cultures, this has kept many AI and blockchain initiatives at the pilot stage rather than embedding them into budgeting, procurement, financial and evaluation processes.

Harnessing AI and blockchain for enhanced efficiency in multilateral institutions

Yet the potential benefits of deeper adoption are clearly substantial. AI and blockchain could significantly improve funding efficiency by automating compliance checks, reducing leakages and enabling predictive analytics to identify underperforming projects earlier. Blockchain-based systems could support programmable disbursements, releasing funds automatically when verified milestones are met. AI could also improve institutional function by freeing staff from administrative tasks and enabling greater focus on strategy, supervision, streamlining and learning.

To realize these gains, multilateral organizations must move beyond experimentation toward structural reform. This requires interoperable digital infrastructure, credible governance frameworks for emerging technologies, and sustained investment in internal technical capacity. AI and blockchain are not panaceas, but when used strategically, they offer a pathway to leaner, more transparent, more effective, and more accountable multilateral institutions.

• This article was also published at Fair Observer