• Remittances identified as key sector for fintech companies
• Dubai praised for embracing Blockchain and other technology
Fears of an imminent disruption to traditional banking from the financial technology sector are overblown, with a collaborative approach being the most likely way forward, according to experts at the Global Islamic Economy Forum (GIES) being held in Dubai, UAE.
Zubair Ahmed, Head of IT & Business Innovation at Emirates Islamic Bank, said: “The good things about fintech companies are speed and customer focus, yet the cons are they are not widely regulated. Increasingly, the relationship between banks and fintech is being seen as a much more complementary and collaborative one than competitive.”
He added that opportunities exist for fintech in innovations such as digital currencies and Blockchain. “The fintech revolution cannot be done by a single bank, but a single bank can create a new norm,” he said. “The good thing is that here in the UAE, we have a great body of federation banks which gives input to UAE Central Bank and has such discussions. Dubai government’s vision of using Blockchain I think will really help the ecosystem and third parties.”
Abdul Haseeb Basit, CFO of the UK’s Innovate Finance, agreed that a collaborative approach is most likely. “The challenge for startups is regulation. Fintech realises that regulation is where banks have an advantage, while (banks) also have the ability to access a wide customer base. Banks already have that scale so it makes sense for fintechs to partner with them rather than market on their own.”
He also agreed with Zubair that Dubai’s focus on Blockchain could be a game-changer. “Dubai’s government aspirations to be a Blockchain government are huge. Having a system where you can track and log all transactions is a great step forward. In most cases using applications which already exist actually makes financial transactions and processes cheaper and faster."
Basit identified remittances as the next big thing. “I think (remittances are) where we could see the next unicorns* in fintech,” he said. “Companies who specialise in this can come here and capture market share.”
Abdulla Al Najran, Deputy CEO, Boubyan Bank, Kuwait, said banks should view fintechs favourably. “Banks must work with fintechs as they have ideas that the older generation will not come up with. We are also working with the regulator and bringing new ideas to the table," he said.
“Non-traditional customers are choosing to go with shari'ah-compliant products and Islamic banks because of the transparency and now the technology. Technology and fintech can help Islamic banks broaden their customer base.”
David Martinez de Lecea, Specialist Consultant, FinTech, Roland Berger in the UAE said: “Regulation is the biggest challenge. We have an invested in products that are better than others but it takes six to eight months to roll them out. We are developing great solutions for customers that lower cost and improve access but the regulatory side is still looking at models that were developed two years ago. This process needs to move faster.”
He added that Dubai is successfully positioning itself at the nexus of finance and technology. “The most groundbreaking things we are going to see in the next years are artificial intelligence technology, future accelerators and initiatives launched in Dubai – very exciting things are happening here and it’s going to become the next global capital of the Islamic world,” he said.
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*A unicorn is a startup which does not yet have a track record but nevertheless is valued at US$1 billion or more.