Middle East’s banking industry headed for tech revolution

Technology adoption not a choice but an imperative as fintech changes sector landscape

The Middle East’s banking industry is gaining pace in technology adoption and is catching up with the rest of the world in digitization, according to experts speaking at the sixth annual Middle East Banking Forum in Dubai on Sunday.

Industry leaders said the future of the industry will be more digitized with mobile banking, faster payments and open banking APIs becoming the norm than an exception.

The Forum organized by UAE Banks Federation (UBF), featured global and regional banking industry experts, regulators and technology innovators.

“The enthusiastic participation of industry regulators, experts and executives is a true reflection of the industry stakeholders’ unwavering commitment to come together and contribute to ongoing efforts focused on future-proofing the regional banking sector,” said Abdul Aziz Al Ghurair, Chairman of UAE Banks Federation.

While the banking sector across the world and in the region are focusing on technology transformation, experts said the adoption of new technologies is no more an option; rather, it has become an imperative for banks and increasingly banks and financial institutions are transforming into technology companies.

“Embracing change and revisiting business models will become imperative for traditional banks to survive amid the rise of digital technologies, increasing competition from new non-bank entrants and shifting customer demands,” said Brett King, best-selling author of ‘Bank 2.0 and Bank 3.0’, and founder and CEO of mobile bank Moven.

Offering a central banker’s perspective on forthcoming disruptions, opportunities and challenges, Olli Rehn, Governor of the Bank of Finland and Member of the Governing Council for the European Central Bank (ECB) highlighted in his keynote address how the financial industry is going through a major transformation driven by the emergence of new technologies. “The pace at which changes are happening in the industry, it is crucial to find the right balance between regulation and innovation in order for consumers and banks to benefit from new possibilities,” said Rehn.

Going through the current rapid pace of changes, industry experts said banks should work towards a financial architecture that supports sustainability in the economy.

“Sustainable finance is increasingly becoming important and lenders and investors must contribute to local and international efforts towards creating a more sustainable global economy by incorporating environmental, social and governance principles into their decision making,” said Daniel Klier, Group Head of Strategy and Global Head of Sustainable Finance, HSBC.

UAE banks make big leap in tech adoption

As fintech is radically changing the finance industry, innovations such as artificial intelligence, machine learning, blockchain technology, biometric identification, cloud computing, and the use of big data are revolutionising the industry, the UAE’s banking sector is making investments in latest technologies, said Saif Hadef Al Shamsi, Assistant Governor of the UAE Central Bank.

“In the UAE, we are observing that incumbent financial institutions, and banks in particular, continue to make investments in fintech solutions to stay ahead of the curve,” said Al Shamsi.

Both incumbent technology-savvy banks and challenger fintech companies are increasingly offering technology-enabled solutions that enhance the user experience and the ability to target customers with better tailored products. Furthermore, solutions for expanding access to financial services through mobile banking and other forms of branchless banking are an increasing trend, to cater to the needs of customers and drive cost efficiencies.

The strategy includes both the upgrading of their own systems and enhancing their services to enable lower cost of delivery and better customer experience, and strategic acquisitions of start-up fintech firms.

Al Shamsi called on banks to utilise technological advances to target the unbanked segments of the population in the country. The challenge, he said, is therefore to design solutions that can successfully address the lack of access and expand the outreach to the people who are excluded from the formal financial system or its essential components.

“Fintech innovation provides an opportunity to find and promote solutions that enhance the deepness of financial inclusion and bring down the costs of cross-border remittances. Solutions such as the KYC utility and e-wallets can be seen as efforts that support the financial inclusion agenda,” he said.

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Source: Gulf News