MEA Finance - February 2021

February 2021

Heading toward positive outcomes Bryan Stirewalt, Chief Executive, Dubai Financial Services Authority (DFSA)

February 2021

Heading toward positive outcomes Bryan Stirewalt, Chief Executive, Dubai Financial Services Authority (DFSA)

14 Retail Banking | 24 Open Banking | 36 Leaders in Banking Technology | 46 Wealth Management | 54 Trade Finance

HOW CAN YOU ACCESS U.S. REAL ESTATE INCOME SOLUTIONS? LAKE RIDGE PARKWAY

DALLAS

FORT WORTH

In business for over 40 years, the Walton Group of Companies is an international real estate investment company focusing on the research, acquisition, administration, planning and development of strategically located land in major North American growth corridors.

Working closely with the largest U.S. homebuilders, we specialize in providing innovative land-based real estate products focused on generating short to medium term USD income for qualified investors.

Endorsed as Shariah-compliant

by Amanie Advisors

Speak to us today to learn more about our products and how you can deliver superior returns for your High Net Worth Clients.

For more information, please contact TIM HAYWOOD at Timothy.Haywood@walton.com | +971 05 44 888 673 Risk disclosures: Investing in land has risk. Land investment is illiquid and it may be impossible for you to sell your land within a short period, or at any time at all. Land could potentially lose value over time. Past performance is not necessarily indicative of future results. No representation is made that profits, income or other returns will arise, or will likely arise, from the acquisition, holding, disposal or any other dealing with the land, or that any profits, income or other returns will arise or will likely arise within any specific time. These risk disclosures do not purport to disclose all risks associated with land purchases. Walton does not provide any investment, financial, accounting, legal or tax advice.

You should carefully consider whether land investment is suitable for you in light of your financial circumstances, and consult professional investment and tax advisers if necessary.

Walton and its representatives are not licensed to deal with real property located in Mainland China, Hong Kong, Macau, Taiwan, Japan, Korea, UAE, Singapore, Malaysia, Thailand, Vietnam, Indonesia, India, Philippines and South Africa.

202008_MEA Finance Ad_210x270mm.indd 1

5/8/2020 11:56 AM

In this issue...

I

t would be easy to remain downcast at the moment. Hopes for a swift end to bans on international travel and a return to familiar business routines remain on hold.

Masks and regular Covid-19 tests remain the norm. But there are silver linings.

Our cover interview this month, from p32, is with Bryan Stirewalt, Chief Executive of the Dubai Financial Services Authority (DFSA). He speaks of the opportunities that the international pandemic has brought – not just in terms of the resilience, agility and collaboration demonstrated by the financial services industry, but more significantly in the new areas that have been opened up like cloud solutions and FinTech.

It has, he says, “permanently altered the way we do business, work, and from where we work”.

Perhaps the most important regulatory and market change in the financial service sector has been open banking – one of our themes of this issue from p24.

We talk to three experts in the field. Mohamed Abdel Razek, CIO of Standard Chartered AME & Islamic Banking, explains how the bank’s API-based architecture improves integration with third parties, making it easier to widen a banks’ portfolio of product options; Shashank Nagavajhala, Enterprise Architect at Arqitek, argues that open banking will become the framework for banking and financial activity; and Wissam Khoury, Head of International at Finastra, outlines the way that open banking will reshape the competitive landscape and customer experience of the banking industry.

Elsewhere in this issue (from p48), George Hojeige, Chief Executive Officer of Virtuzone, talks about how the UAE’s foresight and proactive strategy became the backbone of a resilient economy, positioned for firm recovery.

But with everyone’s attention on managing the global pandemic, it is easy to forget normal business planning. Nina Auchoybur, Managing Director at Ocorian, from p52, explains why a UAE foundation provides a dynamic option that can accommodate a family’s evolving priorities.

Finally, it would be remiss of me not to mention our detailed look at retail banking from p14. Senior executives at Commercial Bank of Dubai, HSBC and National Bank of Fujairah explain how the retail banking landscape has been forced to change and why it is emerging even stronger.

There is a great deal to get your teeth into this month.

Enjoy!

Adrian Murdoch mea-finance.com

3

CONTENTS

CONTENTS 32

MARKET NEWS

6

Emirates NBD rings market-opening bell at Nasdaq Dubai to celebrate listing USD 750 million bond

8 12

GFH Financial Group acquires Lulu anchored mall in Hidd City Arab Investment Bank selects Temenos to drive digital growth and financial inclusion

RETAIL BANKING

16 18

Better for the change The shape of things to come

OPEN BANKING

24 26 28

The Open Banking revolution Fueling the future of banking Banking’s new normal

COVER STORY

32

MEA Finance (a MEA Business supplement) WEB: www.mea-finance.com EMAIL: info@mea-finance.com PUBLISHED BY: Creative Middle East Media FZ LLE, 19th Floor, Creative Tower, Fujairah Creative City, PO Box 4422, Fujairah, UAE EXECUTIVE DIRECTOR AND PUBLISHER : Kenneth Mitchen Email: ken.mitchen@mea-finance.com

4

Banking and Finance news in the MEA market

Heading toward positive outcomes

8

LEADERS IN BANKING TECHNOLOGY

36

The next normal: thought leaders’ insights

38 40

An appetite for change A customer-centric focus

16

WEALTH MANAGEMENT

46

Interview with Deutsche Bank’s Loïc Voide, Co-CEO for the Middle East and Africa

52

UAE foundations, so much more than succession planning

ADVISORY VIEW

48

Opportunity knocks

PARTNER CONTENT

50

Inspiring better banking for the post-pandemic world

26

38 52

TRADE FINANCE

54

Staying the course

OPINION

56

Mentorship, a Fast Track for New Pool of Women in Finance

LIFESTYLE

58

The art of the horologist

50

54

58 56 mea-finance.com

5

MARKET NEWS

Emirates NBD rings market-opening bell at Nasdaq Dubai to celebrate listing USD 750 million bond First public debt offering from UAE in 2021 supports economic recovery from COVID-19 disruption

E

mirates NBD rings marketopening bell at Nasdaq Dubai to celebrate listing USD 750 million bond.

Hesham Abdulla Al Qassim, Vice Chairman and Managing Director of Emirates NBD, rang the market-opening bell at Nasdaq Dubai today to celebrate the listing of a 750 million US dollar conventional bond.

The bond is the first public debt issuance from the UAE in 2021. The proceeds raised will assist Emirates NBD, one of the largest banking groups in the region, as it supports customers and the wider UAE economy in achieving comprehensive recovery from the effects of COVID-19.

The five-year bond pays a coupon of 1.638%, the lowest ever coupon on a five-year benchmark transaction from Emirates NBD. The issuance attracted 2.3 billion US dollars in orders from over 140 accounts. Demand was global with 49% of appetite coming from Asia, 35% from Europe, 11% from MENA and 5% from the US and elsewhere.

Hesham Abdulla Al Qassim, Vice Chairman and Managing Director of Emirates NBD, said: “Our successful issuance of the first public bond out of the UAE in 2021 reflects our commitment to support our retail and business customers and strengthen our provision of vital services to enable them to prosper. As the UAE prepares for durable

6

economic recovery from the disruption caused by COVID-19, we are delighted to play a role in promoting economic and social wellbeing in line with the effective policies of the national leadership.”

Emirates NBD is further developing its services including retail banking and wealth management, corporate and institutional banking, global markets and treasury and Islamic banking. In particular, it is expanding its pioneering focus on digital banking innovation.

His Excellency Essa Kazim, Governor of Dubai International Financial Centre and Chairman of Dubai Financial Market (DFM), said: “The listing of Emirates NBD’s latest bond on the region’s international financial exchange demonstrates the capacity of the UAE’s leading financial services institutions to collaborate effectively in capital markets transactions that benefit investors and strengthen the economy.

Dubai will continue to enhance its listing infrastructure on behalf of UAE and overseas issuers and market participants.”

Emirates NBD is the largest financial services bond issuer on Nasdaq Dubai with six listings valued at 4.35 billion dollars.

Abdul Wahed Al Fahim, Chairman of Nasdaq Dubai, said: “Following a record year for new debt listings in 2020, we look forward to hosting many significant listings in 2021 from prominent issuers from the UAE, the wider Middle East and globally. The exchange is positioned to play a growing

Banking and Finance news in the MEA market

role in expanding Dubai’s capital markets leadership in the region and connecting a widening range of issuers and investors.”

Dubai is the largest venue in the Middle East for USD denominated debt listings, with a total value of 91.1 billion US dollars. Nasdaq Dubai’s new Sukuk and conventional bond listings in 2020 reached an annual record of 19.15 billion US dollars, up 8% from the previous record of 17.7 billion US dollars in 2019.

Shayne Nelson, Group CEO of Emirates NBD, said: “The success of our latest bond issuance and the strong appetite from global investors reflect the sound strategies that Emirates NBD is pursuing and strong market confidence in the economy of Dubai and the UAE. Nasdaq Dubai provides us with excellent links to investors in the region and globally together with high public visibility.”

Hamed Ali, Chief Executive of Nasdaq Dubai and Deputy Chief Executive of DFM, said: “We are delighted to provide fresh support for Emirates NBD’s beneficial and innovative financial services activities as the UAE economy prepares for further development in 2021. Dubai’s exchanges are committed to strengthening the Emirate’s role as a centre for capitalraising and promoting regional and international investor flows.”

Emirates NBD’s latest 750 million US dollar bond listed on Nasdaq Dubai on January 13, 2021.

GFH Ad - MEA Finance.pdf

C

M

Y

CM

MY

CY

CMY

K

1

9/21/20

4:16 PM

MARKET NEWS

GFH Financial Group acquires Lulu anchored mall in Hidd City

G

FH Financial Group (“GFH”) has expanded its presence in the retail sector by acquiring 80% of Hidd Mall alongside a strategic investor.

The 46,000 m2 mall, located in the fastgrowing area of Hidd in Muharraq, is fully leased to Lulu Hypermarkets, the largest retail chain in the Middle East and one of the largest chains in Asia region under a long-term lease. The mall currently boasts 100% occupancy, with Lulu Hypermarkets sub-leasing the space to a diverse range of multinational, regional and local tenants.

Commenting on the deal, Hammad Younas, Chief Investment Management of GFH, said: “GFH is excited to announce this latest landmark acquisition, one that is underscored by having Lulu Hypermarkets, the strongest retail chain in the GCC, as the primary tenant.

“This a resilient investment in a key sector which we believe will witness significant growth as the pandemic winds down. Malls anchored by grocery stores have already proved highly resilient, with families choosing to stay at home more during the pandemic.”

The mall enjoys a high footfall from Hidd residents. In addition to the Lulu Hypermarket, Hidd Mall offers a range of banking, retail and F&B outlets such as the National Bank of Bahrain, Khaleeji Commercial Bank, Standard Chartered,

8

Malabar Gold and Diamonds, Yum Yum Tree Food Court, KFC, Baskin Robbins, Jasmi’s and Gloria Jean’s Coffees. Other government and service providers located in the property include branches for the Bahrain Traffic Police Station and Ministry of Interior, alongside telecommunications providers Batelco and STC. Additionally, Hidd Mall serves as a key location for Lulu Hypermarket’s

Hammad Younas, Chief Investment Management, GFH

online distribution channel for its store items.

GFH currently has $12 billion asset and fund under management across a range of industries and sectors globally.

In addition to Hidd Mall, the Group’s retail investment include Events Mall in Jeddah and the Entertainer, the leader in loyalty and rewards solutions.

This is the second mall anchored by Lulu Hypermarket in GFH Portfolio

Banking and Finance news in the MEA market

Campaign period is from February 2021 until January 2022. There will be no monthly prize during quarterly prize draws. All eligible customers of Ahli United Bank B.S.C shall be included in all prize draws. Deposits held with Ahli United Bank B.S.C in the Kingdom are covered by the regulation protecting deposits and unrestricted investment accounts issued by the Central Bank of Bahrain in accordance with resolution no. (34) of 2010. Terms and Conditions apply.

MARKET NEWS

Mastercard evolves contactless technology for quantum world

Ajay Bhalla, President, Cyber & Intelligence, Mastercard

M

a s te rc a rd a n n o u n c e d that it is applying the latest quantum-resistant technologies to develop the next generation of contactless payments.

The new Enhanced Contactless (Ecos) specifications are an industry-first and will help ensure that as our dynamic digital landscape evolves, and new technologies like quantum computing are introduced, contactless technology is future-proofed to ensure consumers will continue to enjoy the same high levels of security and convenience they do today, in the decades to come.

Th e d e m a n d fo r fa ste r, m o re convenient, safe and now cleaner ways to pay has driven the transition to contactless and this trend will only continue to grow. In fact, in the third

10

quarter of 2020, contactless penetration represented 41% of in-person purchase transactions globally, up 30% from a year ago.

Mastercard has been spearheading the transition to contactless payments for years and developing specifications like Ecos to support industry standardization efforts and help ensure the entire ecosystem benefits from higher levels of security.

“Contactless is the present and future of in-person payments,” said Ajay Bhalla, president, Cyber & Intelligence at Mastercard. “2020 brought with it a rapid acceleration of digitization and reinforced the importance of digital solutions - like contactless - to help meet our everyday needs. As the ecosystem continues to evolve, more connected devices and the

Banking and Finance news in the MEA market

Internet of Things are going to create more user demand and an even greater need for constant innovation to build nextgeneration capability, helping to ensure that technology never outpaces trust.”

With Ecos, consumers, merchants and financial institutions will benefit from: • E nhanced Convenience – Over time, we envision that the in-store shopping experience will become increasingly contactless-only. These new specifications will help ensure any device truly can be a payment device, while eliminating the need for a backup swipe or dip of a card.

• E nhanced Trust – Ecos leverages new, quantum-resistant technology to deliver next-generation algorithms and cryptographic key strengths while keeping the contactless interaction under half a second.

• E nhanced Privacy – The new specifications deliver advanced protection when account information is shared between the card or digital wallet and the checkout terminal. Ecos builds on the increased requirements to support various privacy regulations.

As the new specifications are activated over the coming years, consumers and merchants can expect a seamless transition. Digital wallets, mobile payments, contactless cards and point-of-sale terminals will continue to work as they do today. Compatibility with Ecos and current contactless specifications is simple. Ecos works behind the scenes and is delivered via a software upgrade, therefore no new hardware or terminals are required.

This investment complements similar investments in tokens, 3-D Secure and Click to Pay, delivering a better consumer and merchant experience.

MARKET NEWS

Arab Investment Bank selects Temenos to drive digital growth and financial inclusion

T

emenos announced that Arab Investment Bank has selected Temenos to power its digital customer experience. Arab Investment Bank chose the marketleading capabilities of Temenos Infinity and Temenos Payments to improve performance, drive its digital growth strategy and provide a boost to financial inclusion for millions of Egyptians.

Arab Investment Bank, which is among one of the fastest growing banks in Egypt, provides personal and business banking products as well as investment and Islamic banking services. With Temenos Infinity, the bank has embarked on a digital transformation journey to make banking and financial services easier, faster and more accessible for all Egyptians. Egypt has an adult population of over 67 million and while over 90 per cent have a mobile phone, only 1 in 3 has a bank account and less than 6 per cent made digital payments in the last year.

Arab Investment Bank already uses Temenos Transact as its core banking technology. Now, with Temenos Infinity, the bank benefits from the leading omnichannel digital banking product covering customer engagement from acquisition, to account servicing, through to long-term retention. Using both products, the bank is able to achieve an end-to-end digital banking transformation and market-leading cost-income ratio.

The performance benefits will be seen in higher customer growth, lower cost of marketing, improved front office

12

efficiency with increased STP rate and reduced asset write-offs with Explainable AI lending.

Temenos Infinity accelerates timeto-market for new products and deliver a seamless, multi-experience digital journey for its customers. With Temenos Infinity, Arab Investment Bank will offer a seamless digital experience to its customers across digital touchpoints for all retail banking products, reducing client onboarding to just minutes.

With its deep analytics, Temenos Infinity the leader in driving customer a c q u i s i t i o n a n d d i g i ta l b a n k i n g engagement and enables banks to increase digital revenues 5x and cut customer onboarding time by 75%. Built on a microservices architecture, Temenos Infinity is the most open and agile SaaS product allowing banks to continuously extend and expand their solution for all or portions of the customer lifecycle.

Digital payments is also a strategic growth area for Arab Investment Bank and with Temenos Payments, the bank benefits from a truly comprehensive, universal platform for efficient payment execution and distribution – removing the need for a different system for different payment types.

Arab Investment Bank Board of Directors, stated: “Based on Arab Investment Bank strategy, we chose to partner with Temenos to lead our digital transformation, not only because it has the most advanced technology, but also for its strong presence in the region and its reputation for rapid

Banking and Finance news in the MEA market

Supports bank’s mission to boost economic development and financial inclusion for 44 million Egyptians

implementation and time to value. With support from Temenos, Arab Investment Bank is on a path to becoming a worldclass digital bank. Digital channels are vital to achieving our growth goals and Temenos’ advanced technology will enable us to design and execute a holistic model to support digital acquisition, onboarding, engagement and cross-selling.”

J e a n - Pa u l M e rg e a i , M a n a g i n g Director – Middle-East & Africa, Temenos, commented: “Internet and mobile banking are key to unlocking economic development and financial inclusion and so Temenos is proud to support Arab Investment Bank in its bold mission to improve access to digital banking services in Egypt. The suite of Temenos products deployed by Arab Investment Bank provides an agile platform to move forward at speed with its digital ambitions. By making it easier to open a bank account, receive and make digital payments, our technology is helping Arab Investment Bank dramatically improve the lives of 44 million Egyptians who currently do not have a bank account.

RETAIL BANKING

GCC Retail banking: Emerging stronger The Gulf region has a keen eye for fintech and the initiatives being implemented in the UAE, Bahrain, and Saudi Arabia point to a disruptive transformation

By Walter Sebele

A

s the GCC financial services sector adjusts to the new normal amid the economic fallout due to the COVID19 pandemic and low oil price while looking into the future, the retail banking landscape has undergone considerable transformation. Regional lenders must negotiate an operating environment characterized by changing customer b e h a v i o r, e c o n o m i c h e a d w i n d s , intensifying competition, regulatory pressure and technological disruption.

Moody’s projected a negative 2021 outlook for Arabian Gulf lenders and cautioned that the grim future is driven by subdued growth, prolonged business disruption due to the pandemic and fiscal consolidation that is squeezing loan quality and profitability.

However, these trends are not new to the GCC banking sector, but they have been significantly intensified by the coronavirus pandemic, said KPMG. PwC highlighted that on the digitalization front, regional banks have been investing significant sums in artificial intelligence (AI) as well as joining forces with fintechs to meet customers’ evolving demands and remain agile.

“Digital development has both enhanced personal banking and also

14

required it to keep up with the digital developments of non-financial sectors,” said Matt Colebrook, HSBC’s Regional Head of Wealth & Personal Banking, EMEA.

Digital transformation The Gulf region has a keen eye for fintech and the initiatives being implemented in the UAE, Bahrain, and Saudi Arabia point to a disruptive transformation.

GCC banks were already at the forefront of innovation and digital transformation well before the outbreak of the coronavirus pandemic. Thought leaders see this trend continuing to dominate the banking sphere driven by changing customer needs and regulatory initiatives such as regulatory sandboxes.

Collin Dallas, the Head of Retail Banking at National Bank of Fujairah, said that just like other UAE lenders, National Bank of Fujairah is at the forefront of many of the country’s efforts to become a cashless society such as Ministry of Finance’s eDirham Instant.

In the UAE, DIFC Fintech Hive and ADGM’s FinTech Digital Lab are some of the region’s largest financial technology accelerators that are supporting FinTech, InsurTech, RegTech and Islamic FinTech startups to transform their ideas into working prototypes to accelerate the

Banking and Finance news in the MEA market

development and market introduction of digital banking products and services.

With financial technology developing rapidly, and profits, soundness indicators and asset growth remaining healthy despite the impact of COVID-19, the banking sector is well-positioned to continue leading non-oil growth and diversification in the Gulf.

The next frontier “The ongoing pandemic crisis has helped accelerate the demand for digital banking and even customers who have traditionally been cautious in terms of digital adoption, have now started to realize the benefits of digital banking,” said Amit Malhotra, General Manager of the Personal Banking Group at Commercial Bank of Dubai.

The outbreak of the pandemic brought a whole set of challenges that the entire financial service industry was not ready for. However, COVID-19 also accelerated and further strengthened the adoption of non-cash payments channels, a trend that was already in full throttle across the GCC. The shift to contactless payments methods across the GCC is being driven by the growth in e-commerce, governments’ smart cities initiatives, an enabling digitized banking system and a tech-savvy youthful population.

A survey conducted by Visa in partnership with Dubai Police and Dubai Economy in 2020 revealed that 49% of UAE consumers are now shopping online due to the pandemic, with three out of five (61%) now using cards or digital wallets more to make payments online instead of opting for cash.

RETAIL BANKING

Better for the change Retail banking is the publicly visible aspect of the digitization of banking and financial services, with the changes it brings experienced by millions of customers every day. Amit Malhotra, General Manager of the Personal Banking Group at Commercial Bank of Dubai, answers questions from MEA Finance about what is currently shaping retail banking and what can be expected from it in the future

A

s retail bank, what was your most influencing experience of 2020?

I t h i n k , C OV I D -1 9 a n d the resultant drive towards digital transformation has been the most influencing experience for most organisations and not just banks in 2020.

However, at CBD, we had embarked on the Digital transformation journey well before the current crisis. The ongoing pandemic crisis has helped accelerate the demand for digital banking and even customers who have traditionally been cautious in terms of digital adoption, have now started to realise the benefits of digital banking. In 2020, CBD launched several new digital products including the CBD Digi Account and instant virtual debit and credit cards.

Through our Digital products we have put the bank in the palms of the customers as it enables them to open a CBD account instantly, get a new credit card or even get a loan for emergency cash in just a few minutes using only their Emirates ID. Positioned as ‘the UAE’s Most Rewarding Digital Account’, the CBD Digi account offer customers a host of free banking services including free remittances with best in market exchange rates, free ATM withdrawals across CBD ATM network and

16

a free cheque book, as well as an option to open up to 11 multi-currency accounts, including a Gold account. What’s more, customers do not need to maintain any minimum balance or transfer their salaries to open the account.

How will 2020 shape the direction of regional retail banking and finance in 2021?

2020 has helped in accelerating digital transformation but in order to leverage this opportunity for greater competitive advantage, banks will need to continue

combined with AI and machine learning.

This will help in providing real time personalized website banners, tailored push notifications, relevant financial recommendations and offers.

What is your key customer demographic for 2021 and why?

Since its inception, CBD has been a bank, by and for family-owned businesses across all the Emirates in the UAE. Traditionally CBD has a strong franchise in institutional and corporate banking, but we are increasingly using that

WE WILL STILL NEED BRANCHES FOR MORE COMPLEX TRANSACTIONS AND SERVICES AND WHERE HUMAN INTERACTION IS REQUIRED. to innovate and adopt an agile approach to simplify processes to create better digital customer experiences at par with the likes of Amazon, Google and Apple.

Predictive personalization will also be a key digital transformation trend for success in 2021, using data and analytics

Banking and Finance news in the MEA market

strength to expand in retail banking and banking for SMEs as well.

All of our customer segments are our top priority and we constantly try to understand their needs and fulfill them through innovative financial products and services. However, in line with the

a similar partnership agreement with the Abu Dhabi Department of Economy (ADDED).

Has the higher speed of digitization reduced or increased the ways you work with different customer groupings or generations?

Improvements in technology are driving higher customer expectations of how banks should deliver their services and interact with customers. Banks are expected to move quickly and nimbly to meet the ever-increasing expectations of customers as the benchmark for customer experience is set by the likes of Amazon, Google and Apple. Customers are used to getting hyper-personalized products and services delivered in real-time. Today’s customers are no longer willing to wait two weeks for an account to be opened or for a loan to be disbursed. We have to make sure we are able to deliver our products and services in the same personalized, real-time way, which requires end-to-end digitization of our processes.

Amit Malhotra, General Manager, Personal Banking Group, CBD

Government’s directives, CBD has been focusing on the SME sector recently. SMEs are key players in the global landscape and vital contributors in the national economy. According to the UAE Ministry of Economy, SMEs represent over 98% of the total number of companies operating in the country

and contribute 52% of the GDP from nonoil sectors. As a result, there is a strong need to provide financial solutions to this important customer segment.

We already have a strong partnership with Dubai Economy to provide innovative financial solutions to DED Trade License holders. We have also recently signed

Is now a better time to be a retail banking and finance customer in the region than it was five years ago?

Yes, we are in the midst of an exciting and significant transformational phase.

In the past financial services relied heavily on the physical branch and ATM network and required customers to visit branches in person to do KYC checks and sign documents etc. Today, thanks to technological advancements banks can run complex operations virtually without the need of a branch or the physical attendance of a customer.

I think going forward the reliance on branches will reduce but will never be completely phased out. We will still need branches for more complex transactions and services and where human interaction is required. We have already begun evolving to a ‘phygital’ distribution solution, part physical and more digital in keeping with the customer trends. mea-finance.com

17

RETAIL BANKING

The shape of things to come Matt Colebrook, Regional Head of Wealth & Personal Banking, Europe Middle East and Africa, tells us how the past year has influenced the retail banking sector and how the needs of HSBC’s customers are leading to a blended approach offering more omnichannel services with direct customer contact

A

s a retail bank, what was your most influencing experience of 2020?

The commitment of our staff to focus on how we could continue to serve our customers and support them, when much of the region was in lockdown, was remarkable and left a lasting impression on me. Our branches remained open wherever we were able to do so, with our staff taking a level of personal risk whilst maintaining the highest standard of safety and care.

In our contact centers, we set out to achieve 100 per cent of staff working from home as quickly as possible, to safeguard our people and alleviate any service disruption when our customers needed us the most. We saw incredible engagement amongst our teams during this time; laptops were flown to India, hundreds of desktops were relocated to our colleagues’ homes and in some cases Wi-Fi and power supply units were provided. Over 900 contact center staff were set up to work from home in under three weeks.

18

Using video technology and digital signatures, our clients benefitted from being able to invest, redeem, change asset classes and de-risk, all from the comfort of their homes. We also rolled out HSBC Voice ID in the region, which enables customers to use just their voice for verification when using our phone banking services.

Within matter of weeks, HSBC had fully operational virtual solution for clients and we made significant strides towards mobile-first propositions, which we’re now in a great position to build on in 2021. Such agility and ability to react to the world around us is an important aspect to being an HSBC client.

How will 2020 shape the direction of regional retail and wealth banking in 2021?

The effect that the global pandemic has had on retail and wealth banking in the region has been very evident. At the start of 2020, the sector was on a steady path to digitisation. But the pandemic sped up processes and forced new behaviours

Banking and Finance news in the MEA market

which might have otherwise taken years, and consequentially the personal banking sector accelerated its digital ambitions. It became and continues to be vitally important to understand what a client’s needs are as they adapt to changing financial situations and develop new priorities.

For HSBC, the regional direction of banking in 2021 and beyond is a blended approach where our customers can access an expanded range of offerings via our digital channels, but at the same time have the option to talk to our people when they need support or expertise for their more complex needs. We’ve seen the regulatory environment rapidly evolve and, quite rightly, regulators have become far more active by implementing industry-wide standards to further protect customers. Increased transparency on fees, commission caps and fully qualified advisors are just some of the requirements that now must be met, with much more to come.

What is your key customer demographic for 2021 and why?

Our goal this year, as always, is to help and support our customers as they aspire to achieve things in their lives, whether that’s economic prosperity, satisfying entrepreneurial goals, or supporting their families and building their future.

We have an ambition to establish a market leading wealth management brand by continuing to digitise our wealth propositions, including FX, insurance and investments. Digital wealth solutions are already an area of focus amongst most wealth managers as customers are preferring to interact digitally, especially the mass affluent segment. There is still a desire from clients to see their advisor

but mainly for the initial investment; all servicing already requires a digital solution to be competitive.

This year, HSBC is expanding its Private Banking business in the UAE with new operations in Abu Dhabi Global Market (ADGM), the international financial centre in the nation’s capital. The new licence and location is part of the bank’s plan to substantially grow its wealth management operations in the country and almost double its assets under management in the UAE. HSBC plans to make the UAE a global hub for its international wealth management expertise.

We will also continue to build our book of Wealth clients including our Jade client base, following its launch in the UAE at the start of 2020. HSBC Jade is a bespoke bank account offering a unique combination of personalised relationship management, advanced wealth solutions and luxury lifestyle services to support

THE ADVANCEMENT IN ONLINE AND DIGITAL BANKING TOOLS MEANS TODAY’S CUSTOMERS HAVE GENUINE OMNICHANNEL CHOICES the needs of high-net-worth individuals.

It has been a perfect fit for the UAE and we will continue to engage with this demographic through 2021 and beyond.

How has the higher speed of digitization increased the ways you work with different customer groupings or generations?

The focus this year is digital simplification; prioritising migration onto latest platforms

Matt Colebrook, Regional Head of Wealth & Personal Banking, Europe Middle East and Africa, HSBC

and straight-through processing journeys.

We’re focusing on a mobile-first agenda, including a global money account, and achieving our adoption ambitions of 100% new-to-bank digitally active customers as well as doubling our mobile active customers. A fully operational wealth management digital experience is also on the horizon.

Last year, HSBC UAE launched its online trading platform that enables customers to trade international securities on major stock exchanges in real-time. The platform – incorporated into the Personal Internet Banking site – allows clients to personally manage their equity securities portfolio 24/7, and submit orders themselves with real-time execution. Clients can access stock exchanges in the United States, United Kingdom and Hong Kong, which together cover around 60 per cent of capital markets across the globe. Impressively, our teams rolled out this new product in the midst of the pandemic, and the higher speed of digitisation was certainly an influencing factor.

Is now a better time to be a retail banking customer in the region than it was five years ago?

The advancement in online and digital banking tools, particularly through the larger banks and fintechs, means today’s customers have genuine omnichannel choice. Clients want convenience, accuracy and speed, and while they may still want to discuss that big credit or investment with an advisor in person, today’s technology allows them to be more efficient in their decision making.

Digital development has both enhanced personal banking and also required it to keep up with the digital developments of non-financial sectors. Take biometrics for example – customers expect to be able to access their online banking profiles and send and receive payments with the same ease and speed as they access news websites or login to their social media pages. When being measured by customer experience, regional banks are no longer competing only with each other but also with all online and digital businesses, which is exciting. mea-finance.com

19

26 May 2021 JW Marriott Marquis Dubai, United Arab Emirates

Future of Banking Innovation An exclusive gathering of the region’s leading bankers and technology professionals to discuss pressing challenges of the new digital financial landscape and identify the myriad opportunities presented by the advanced business frontier.

Join more than 150 top executives from leading banks, financial institutions, and technology providers from across MENA. SPEAKERS INCLUDE:

Mohamed Abdel-Razek

CIO – Africa, Middle East & Islamic Banking Standard Chartered Bank

Stefan Kimmel

Chief Operating Officer Commercial Bank of Dubai

Yuri Misnik

Group Chief Technology Officer, Member of the Group Executive Committee First Abu Dhabi Bank

Award Categories FINANCIAL INSTITUTIONS

TECHNOLOGY VENDORS

1. Digital Banking Innovation of the Year

1. Digital Banking Provider of the Year

2. Best Digital Innovation in Islamic Banking of the Year

2. Islamic Digital Banking Provider of the Year

3. Best Neobank

3. Best Cybersecurity Provider

4. Best Cybersecurity and Risk Management

4. Best Core Banking Solutions Provider

Implementation

5. Best User Experience Solution Provider

5. Best Core Banking Technology Implementation

6. Best Data Management Solution Provider

6. Best Islamic Banking System Implementation

7. Best Risk Management Solution Provider

7. Best Data Management

8. Best Analytics Solution Provider

8. Best Analytics System

9. Most Innovative Cloud Services Provider

9. Best Mobile Banking Services

10. Most Innovative Mobile Banking App

10. Most Innovative Emerging Technology Implementation

11. Best RegTech Solution Provider

11. Best Cloud Implementation

12. Bset Trading Infrastructure Provider

12. Best Innovation in User Experience

13. Best AML/KYC Solution Provider

13. Best Innovation in Retail Banking

14. Best Communications Infrastructure Provider

14. Best Innovation in Corporate Banking and Finance

15. Best Open Banking & API Solutions Provider

15. Best Innovation in Investment Banking

16. Most Innovative Payment Solutions Provider

16. Best Innovation in Trade Finance

17. Best Wealth and Investment Technology Provider

17. Best Regulation Technology Solution

18. Most Innovative Digital Wallet Deployment

18. Most Innovative Trading Platform

19. Best Digital Transformation Consultancy Firm

19. Best AML/KYC Solution

20. Tech CEO of the Year

20. Best FinTech Solutions Implementation

21. Financial Services Technology Leadership Award

21. Best Islamic Fintech Solutions Implementation 22. Best AI Technology Implementation 23. Best Open Banking & API implementation 24. Best Branch Digitisation Implementation 25. Best Corporate Payment Service 26. Best Risk & Compliance Implementation 27. Best Retail Payment Implementation 28. Best Treasury Management Implementation 29. Tech Leadership Awards

Submit your entries now!

Step 1: Choose your category.

It is important to review the individual descriptions and criteria before choosing your category.

Step 2: Upload relevant financial performance documents, case studies, or other relevant information.

Step 3: Confirm submission of your entry. *All nominations shall be submitted on or before 26th April deadline.

For inquiries, call +971 50 1005488 / +971 50 9313236 or email: info@mea-finance.com

RETAIL BANKING

Prepared to pioneer Colin Dallas, Head of Retail Banking explains how National Bank of Fujairah has tackled the challenges of the past year head-on and benefited from a pre-Covid-19 focus on digitisation allowing the development of smart new products and services for their customers

H

ow did NBF manage to deal with the impacts of Covid-19 pandemic?

We are fortunate to live in the UAE, where we have the backing of the government and Central Bank of the UAE (CBUAE), who have taken extensive measures to mitigate the impact of the crisis by extending financial programmes to help alleviate the effects on individuals and corporates. At NBF, we have always adopted the partnership-first approach with our clients, especially during challenging times, where our support and counsel is needed the most. Fortunately, we were able to maintain good levels of capital and liquidity to meet the challenges without undue fear.

As a bank committed to health and well-being, stringent measures and protocols were taken to ensure the safety of our employees and customers. Some of these actions include installing hand sanitizers at various common areas and offices, providing disposable gloves and masks to all customers coming in contact with any documentation and our ATM/ CDM network, enhanced cleaning and regular disinfection of high touch points across all our branches and many more.

We also launched a comprehensive

22

the impact brought forth by the global pandemic and the inevitable slowdown in response times across all areas of activity, but we are now more focused on our recovery model. This has been a critical transitionary period and at NBF, our strategy has been not only to respond to these changes with agility, but to thrive on them, further enhancing and strengthening our offerings.

How has the digital transformation trend during the pandemic impacted on running the physical branches? c o m m u n i c a t i o n a n d a wa re n e s s campaign for COVID-19 precautions to keep our staff and customers aware of the current regulations and how to safeguard themselves. Our commitment to provide exceptional customer service remains undiminished, even with working from home (WFH) arrangements there was no drop in any of our significant

IMPLEMENTING DIGITAL SOLUTIONS WAS ABSOLUTELY CRITICAL TO THE CONTINUITY OF THE BANKING SECTOR banking services and in that context, I want to thank our employees for the efforts they have made to ensure that we continue to support our customers seamlessly and proactively. Additionally, we upgraded our core banking system and implemented a number of digitization projects last year.

Just like other banks and businesses in the market, we are still absorbing

Banking and Finance news in the MEA market

The movement towards digitisation was a focus of ours well before the pandemic, so we were well equipped to sustain the transition in an effective manner. Our new branches were increasingly becoming more digitised, and our customers have responded well to emerging technology.

Moreover, we have been integrating automation and robotics to eliminate paperwork from banking processes and on the corporate banking side, developed trade finance payment facilities and other digital platforms to continue enhancing our offering.

This early work enabled us to respond to remote operations very quickly and I am very proud to say we did not experience any downtime in our service provision throughout the pandemic. Similarly, customers have responded to the availability of many of our online services and the adoption rate has exploded to the point where some of the levels of utilisation that we are seeing now, we had not expected earlier for another few years.

What are the most prominent products and technological banking services that the bank aims to launch?

The global pandemic has truly

accelerated the movement towards digital transformation. Implementing digital solutions was absolutely critical to the continuity of the banking sector.

We had adopted an agile mindset and we understand that things are now evolving at a much faster pace than they used to, and thus, tried to remain ahead of the curve.

F o r i n sta n c e, N B F h a s m a d e significant advancements in digitization resulting in improvements in customer

experience, enhanced efficiency through automation and optimisation, improved security and better resilience.

We have pioneered many technology implementations such as automated Disaster Recovery (DR), moving towards open banking architecture with Service Oriented Architecture as a backbone and fully automated end of day business processes. Since 2017, we have also pioneered in Robotic Process Automation (RPA) and Intelligent Process Automation

(IPA) for the major processes in the bank, far ahead of our peer banks in terms of the outputs.

We are also at the forefront of many of the country’s efforts to become a cashless society, as we have partnered with the Ministry of Finance to launch eDirham Instant, the latest digital payment method that allows customers to pay for governmental fees and services using online banking. We also went live with the Emirates Digital Wallet ‘klip’, a cashless payment application that allows customers to store, transfer and conduct payments in a seamless and secure manner.

What are the latest achievements and developments of your bank?

As a dedicated financial partner to businesses in the UAE, we have always recognised the value of SMEs as a key pillar for the UAE, and as such, wanted to extend our support to the business community at a time when they needed it the most. We strove to be the first in the UAE to digitise this vital sector by launching NBF CONNECT - a bespoke platform that was co-created by SMEs, for SMEs. We wanted to create a onestop shop for businesses and empower them with resources and foster a collaborative community to help them navigate the current environment. The results were highly successful and the response from the community was overwhelmingly positive.

What is your outlook for the coming years?

Colin Dallas, Head of Retail Banking at National Bank of Fujairah

In the macroeconomic conditions, we have seen the banking sector operate in the toughest environment given heightened uncertainty levels. We still expect the relative slowdown in credit growth to continue, as industries right-size. Therefore, banks are required to maintain caution to navigate this evolving environment. At NBF, we believe we can move beyond these conditions and continue to fulfill our role as the financial partner for business, focused on our customers’ personal and professional needs. mea-finance.com

23

DATA SECURITY OPEN BANKING

The Open Banking revolution The outbreak of the COVID-19 pandemic is shaping up to be a crucial turning point in the financial service sector, driving the regulatory and market change in Open Banking

B

esides being a powerful enabler of transformation in how banks handle their customers’ financial information, putting control back in the hands of the consumer, Open Banking is driving competitiveness in the financial service industry across the GCC. Open Banking is described as a connected ecosystem of financial services that allows two or more unaffiliated banks to enrich their digital offerings in a safe and secure manner, bringing greater financial transparency and new and tailored customer services to the region.

Shashank Nagavajhala, Enterprise Architect, Arqitek, said, “Open Banking is particularly important as a market disruptor because it can be considered to be part of a broader trend towards the API economy.”

According to KPMG, “In practice, open banking can take many forms including standards and directives such as PSD2 in Europe and Open Banking in the UK. Consumers’ increasing desire for frictionless, more seamless, and intuitive value-added banking experiences and there are a growing number of fintechs and ‘challenger banks’ seeking to capitalize on these developments.

“The rise of technology use and significant mobile penetration has created a new ‘digital native’ banking consumer, who demand online services that are

24

quick, agile, and on par with what in the market of how money is flowing and where it is going,” said Wissam Khoury, Head of International at Finastra.

Through the use of Application Programming Interfaces (APIs), a set of communication protocols used to develop computer applications, Open Banking platforms typically authorizes retail and enterprise clients to access consumers’ financial data in real-time and share account information and transaction history with external parties such as vendors, suppliers, business partners and other banks.

GCC’s open future The outbreak of the COVID-19 pandemic is shaping up to be a crucial turning point in the financial service sector, driving the regulatory and market change in Open Banking. PwC said that globally and in emerging markets such as the Gulf region, Opening Banking has the potential to reshape the financial services landscape and other countries are also making considerable moves in this space.

In the Middle East, Bahrain was the first country to adopt open banking in 2018, replicating the efforts of global finance hubs in Europe and Asia. In October 2020, the Kingdom launched the Bahrain Open Banking Framework (Bahrain OBF) and the framework is holistic in defining the Open Banking Regulation, guidelines,

Banking and Finance news in the MEA market

technical standards for Open API platforms, security standards (including data privacy), and overall governance.

“The largest benefit that arises from open banking is the power to enhance the development of service platforms, as well as financial services,” said Mohamed Abdel Razek, CIO, Standard Chartered AME & Islamic Banking.

In the UAE, PwC stated that new Open Banking platforms are rising with fintechs and lenders moving towards the adoption of open API solutions amid the defining of the roadmap towards open financial markets by national and offshored regulators. Recently, the Central Bank of the UAE revealed that it would launch a FinTech Office to support financial innovation in the country while the ADGM showed support toward the Open Banking idea having awarded its first fully digital banking license and Category 1 status to Anglo-Gulf Trade Bank.

The Saudis are also fully investing in the development of their financial services sector as part of the kingdom’s economic transformation program under its Vision 2030. The Saudi Central Bank “SAMA” opened 2021 by issuing the “Open Banking Policy” to ensure the Saudi financial sector’s infrastructure readiness to leverage “the most prominent financial technologies” and ensure the implementation of necessary regulatory practices.

luna rossa ac75 america’s cup class foiling monohull

apply to the new panerai pam.guard program to benefit up to 8 years of international limited warranty register your timepiece on panerai.com

Dubai - The Dubai Mall / Abu Dhabi - The Galleria Mall, Sowwah Square

UAE_MEA Finance_LuminorLunaRossa_270x210_EN.indd 1

8/5/20 4:26 PM

DATA SECURITY OPEN BANKING

Fueling the future of banking Mohamed Abdel Razek, CIO of Standard Chartered AME & Islamic Banking details the benefits of Open Banking for both banks and customers, with API based architecture improving integration with third parties, making it easier to widen a banks’ portfolio of product options Mohamed Abdel Razek, CIO, Standard Chartered AME & Islamic Banking

H

ow do you define Open Banking?

Open Banking refers to the practice of banks sharing customer data securely (only with written consent) with third-party financial services providers and non-bank financial institutions, such as Fintechs, retail providers and other players. Through the use of application programming interfaces (APIs), the data shared includes account details, transactions, and more, and is only accessible to the customer unless otherwise agreed.

This new technology is disrupting the fabric of the financial landscape as it is changing the way that data is used, stored and shared. Ultimately, it is creating a comprehensive banking environment

26

that is likely to lead to an uncoupling of products from distribution. Resulting in a situation similar to a ‘marketplace’, customers will be able to use a single banking interface to access products and services from a multitude of players, including incumbent banks, challengers and Fintechs. This interface would both give customers a holistic overview and use cognitive analytics to help them manage and optimise their finances.

A g re a t exa m p l e i s S ta n d a rd Chartered’s own open banking offering, aXess, a platform that drives more connectivity between developers, corporates and FinTechs. We curated aXess to service an open community and allow for the experimentation of cuttingedge technologies that can accelerate

Banking and Finance news in the MEA market

ideas. The interface allows for the co-creation of ideas through enabling new business models, sharing best practices, capabilities and tools. Through this, we aim to encourage developers to refine and innovate the best solutions for our clients. APIs on our platform include services targeted at corporate banking and retail banking, such as FX, retail products and custody services.

Do you foresee a noticeable upside for industry revenues because of Open Banking’s adoption or is this just a change in practices and procedures that will make little difference to profitability?

Certainly, open banking has an evident impact on financial growth. A technology

like this can turn operational challenges into opportunities to cut costs and fraud risks, improve employee productivity and become more strategic overall.

Furthermore, with real-time data fed through from corporate bank accounts, finance directors can better understand spending patterns, react with greater agility and gain the insight they need to run their businesses more efficiently. I believe we are only getting started.

Thus, financial institutions risk missing out on the new opportunities provided

by APIs, while fintech startups or large tech firms continue to take market share and inhibit organic growth. Banks such as Standard Chartered have capitalised on the increase in consumer demand by introducing over 100 APIs and publishing a comprehensive standard catalogue that is aligned with international API standards. We are also building on our API investments to continue building on our sustainable banking and financial inclusion goals.

Furthermore, we have championed a series of digital-only banks across eight markets in Africa, the latest launch of which was successfully implemented in Nigeria. In less than a year, Standard Chartered has seen accounts open via the digital bank grow by over 150,000.

How do you assess the plusses and minuses of Open Banking to ensure the positives greatly outweigh the negatives for banks and customers?

The benefits of open banking are evident for the industry - improved customer experiences, new revenue streams, and a sustainable service model for underserved markets. According to PwC, an API-based architecture can improve integration with third parties, potentially making it easier for a bank to support a portfolio of product options - even those provided by partners. Simply speaking, banks today can use their platforms to make certain customer data available to non-bank third parties such as retail stores, giving banks the extraordinary

opportunity to expand their ecosystems to cater to the retail industry.

The largest benefit that arises from open banking is the power to enhance the development of service platforms, as well as financial services. Open banking also serves as the ideal approach to foster collaboration between Fintechs and banks, as no single entity is able to provide a comprehensive catalogue of broad offerings that customers have shown a demand for, such as retail, mobility and delivery services.

However, with the rise of open banking adoption, cybersecurity is an area of concern as Fintechs that use APIs, and

service opportunities offered by FinTech startups. Big banks have increasingly been seen partnering directly with Fintechs to share knowledge and work together to develop and provide amplified services for their customers.

What does the move to Open Banking mean for banks in terms of risk assessment and liability?

Customer protection is a significant issue to ensure long term sustainability of this technology given the fact that, in a digital world, the degree of sophistication of clients and their awareness varies.

This means that clear guidelines on

CERTAINLY, OPEN BANKING HAS AN EVIDENT IMPACT ON FINANCIAL GROWTH

that do not require human authorisation at a transactional level, would be able to access proprietary data from banks and would result in a significant increase of risk to the institution. This can be addressed through a robust risk management function and progressive cybersecurity measures.

Will Open Banking lead to consolidation of financial services due to natural economies of scale from big data and network effects?

Open banking cer tainly has the potential to lead to the consolidation of financial services as banks now have the opportunity to import aspects of the technology to extend their services beyond those that they have traditionally offered, as well as broaden their proposition and provide more comprehensive customer journeys. Open banking is also making it easier for banks to embrace the range of product and

permission, usage, perpetual storage, and destruction of data is key to ensuring the safety and security of both institutions and consumers, as many Fintechs could have short life cycles and are not regulated.

It is important to note that data privacy is not only about the customer taking responsibility; the infrastructure must be secure, and the technology has to be compliant with data protection laws and regulations. This ensures that only approved and regulated providers have access to the open banking ecosystem.

As industry disrupters fight the lingering trust issues concerning data and privacy, banks that have established their reliable services over the decades are in a comfortable position to innovate and address consumer expectations.

Additionally, regulators must recognise this challenge and should insist on robust authentication mechanisms, which would ensure customer awareness and concurrence before accessing and using this data. mea-finance.com mea-finance.com

27

DATA SECURITY OPEN BANKING

Banking’s new normal Open Banking will become the framework for banking and financial activity, here Shashank Nagavajhala, Enterprise Architect at Arqitek explains why this will come to be and why it is important to get it right

H

ow do you define Open Banking?

Open Banking is related to the broader recognition that individuals should have control over their personal data. Open Banking enables this by providing third-party developers with secure access to personal financial and other data held by the bank. This then enables the developer to deliver new services to individuals utilizing the underlying personal financial data.

At the implementation level Open Banking is the process of enabling third-party access to bank data through the use of Application Programmer Interfaces (API). It might sound technical and even mundane. However, the underlying implications are profound and far reaching.

Do you foresee a noticeable upside for industry revenues because of Open Banking’s adoption or is this just a change in practices and procedures that will make little difference to profitability?

Open Banking as a form of market decentralisation realises a spectrum of new business opportunities and associated revenues. As always, the downside is that profitability and even viability threats will reveal themselves to those that do not pay attention to

28

Shashank Nagavajhala, Enterprise Architect, Arqitek

these trends. We advocate the need as a minimum to begin to establish Open Banking practices and to find a way of practically exploring this domain.

Open Banking is particularly important as a market disruptor because it can be considered to be part of a broader trend towards the API Economy. The API Econonmy is one in which institutions collaborate and transact digitally through controlled APIenabled transactions. Such an economy benefits from far lower transaction costs

Banking and Finance news in the MEA market

than we see today. The enterprise is enabled digitally within; but its external transactions are now also digital. Through the parallel development of other key trends and particularly AI we are heading towards highly digitised enterprises transacting digitally.

In this context, Open Banking is a key enabler because it opens-up the market towards higher levels of financial transparency and integration. This in turn accelerates business transactions and leads to economic efficiency.

Central Banks and regulators are therefore driving Open Banking because of the underlying economic advantages.

Competitiveness at a national level is ultimately at stake.

How do you assess the plusses and minuses of Open Banking to ensure the positives greatly outweigh the negatives for banks and customers?

We would assert that any bank that wishes to thrive in the emerging digital economy has no option but to carve out its involvement in Open Banking. It is ultimately a decision whether or not to embrace the future. The only question then is how. The winners will be those that take the most impactful and yet efficient route.

We suggest that this implies taking a lesson from the extensive work that has already taken place in Europe and elsewhere. We term this initial wave of activity ‘API Economy 1.0’ and not everything has gone smoothly.

Following the introduction of Open Banking in the UK, banks were forced to quickly comply with new open API regulations. From the 14th July 2019, banks and relevant financial institutions were forced to have 100% of their API’s live.

However, only 69% of production ready APIs from all major banks in 12 markets were available. None were compliant with the then newly introduced standards.

Many of these challenges arose from a fragmented approach: • Acquisition of generic API platforms as the basis of the solution • Failure to establish and mature Open API as a practice • Failure to leverage an architecturedriven approach • Failure to focus on API governance and monetization

Will Open Banking lead to consolidation of financial services due to natural economies of scale from big data and network effects?

Most certainly. We can already see how BigTech is impacting the financial

services market. Apple Pay and Apple Card are primary examples. Big Tech and other actors have the scale to deliver global platforms that will increasingly challenge the traditional banks.

However, Open Banking also opens up opportunities for new market participants and at every level. Even garage startups

FOR THE TRADITIONAL BANKS IT IS CLEAR THAT NEW STRATEGIES ARE NECESSARY will be actively looking towards Open Banking as an opportunity to deliver new forms of innovation. In this respect Open Banking can be seen as a catalyst for innovation and for the emergence of a new breed of FinTech and other innovators.

For the traditional banks it is clear that new strategies are necessary. The banks

will need to chart their position in the new economy. Their strategies may rely on the extensiveness of their own networks or on their ability to transact efficiently or perhaps in the customer-centric nature of their services. Some banks in the region have already awoken to this reality and there are already instances of banks running hackathons as they actively engage in the new market. Others have yet to respond and can be seen to holding firmly to traditional models.

What does the move to Open Banking mean for banks in terms of risk assessment and liability?

The primary risks for a banks at this stage is to fail to learn from the market. A wrongly directed approach can lead to significant complexity which ultimately leads to a lack of agility, inflated technology costs and potentially greater security exposure.

Beyond this banks will need to focus efforts in understanding the underlying API Economy trend and what it means for their market positioning. Only those banks with the digital awareness and the ability to align business and IT perspectives can be expected to be relevant in the new economy. mea-finance.com mea-finance.com

29

DATA SECURITY OPEN BANKING

The potential to innovate Open Banking will reshape the competitive landscape and customer experience of the banking industry. Wissam Khoury, Head of International at Finastra explains that while it offers potential risks, the gains to consumers and banks will be clear

H

ow do you define Open Banking?

Open Banking, simply, is the ability to share financial data with third parties. It is built on the premise that the data related to financial services customers is safely owned, used, and controlled by those

customers. At a fundamental level, Open Banking facilitates well-rounded financial services in payments and account aggregation. And beyond this, the digitization of data allows fintechs and banks to effortlessly collaborate, bringing the financial ecosystem closer together.

Open Banking enables the industry to become more competitive and therefore offer consumers better, cheaper services.

It brings changes to how banks handle their customers’ financial information, putting control back in the hands of the customer. It means that customers can opt to share their financial information with authorized providers, to gain access to new services and innovation to help them manage their money better.

Open Banking is driving the industry toward hyper-relevant, platform-based distribution, and provides banks a rich opportunity to expand their ecosystems and extend their reach.

Do you foresee a noticeable upside for industry revenues because of Open Banking’s adoption or is this just a change in practices and procedures that will make little difference to profitability?

Wissam Khoury, Head of International at Finastra

30

Banking and Finance news in the MEA market

A 2020 survey by Finastra revealed that nearly nine out of 10 financial institutions in the UAE plan to enable Open Banking in the next 12 months. The appetite for Open Banking is definitely growing. A key driver for banks to adopt tech-driven innovations like Open Banking in the UAE is to cut costs or improve efficiency – a factor cited by 59 per cent of the survey respondents. We are

seeing more and more banks embracing Open Banking because it gives them advantages in optimizing cost structures and increasing revenues.

Leveraging Open Banking is an opportunity to create new revenue streams, retain and acquire customers, and simultaneously staying competitive in an increasingly crowded market.

The success of any Open Banking business model will be contingent on the value it creates, or the monetization opportunities it brings.

To realise its true potential, Open Banking needs a foundational technology that can facilitate scalable innovation and accessibility. Cloud is an opportunity like no other. It enables banks to run a more cost-efficient operating model while providing the agility and modernity that legacy on-premise models lack.

Integrating third-party fintech into bank IT infrastructures can be completed seamlessly via APIs. Moreover, cloud solutions can also improve operational ef f i c i e n c i e s t h ro u g h e n h a n c e d automation and resilience.

These benefits will influence the way banks evolve their operations. Many banks are still operating on-premise, but an increasing number are now using a hybrid model for cloud applications such as CRM and HR, connecting these to their on-premise core. Established banks are starting to use private clouds, through which they can take advantage of the distributive processing power that cloud provides and simplifying their IT infrastructure.

How do you assess the pluses and minuses of Open Banking to ensure the positives greatly outweigh the negatives for banks and customers?

Consumers’ attitude towards banking has shifted tremendously in recent years. The rise of technology use and significant mobile penetration has created a new ‘digital native’ banking consumer, who demand online services that are quick, agile, and on par with what

they see in other sectors such as retail and social media.

Open Banking has compelled banks to become more transparent, and enables consumers to compare offerings from different banks, whether for mortgages or loans. It has also led to transparency between transactions and payments, which, in turn, has created a transparency

no longer possible to aim for success in isolation. Innovation rarely comes exclusively from within, and the sooner banks realise the inherent value within the new, open ecosystem, the better they can secure their own relevance.

One of the greatest advantages that traditional banks retain is access to data.

By leveraging this through partnerships

INTEGRATING THIRD-PARTY FINTECH INTO BANK IT INFRASTRUCTURES CAN BE COMPLETED SEAMLESSLY VIA API’S

in the market of how money is flowing and where it is going. Open APIs have not only created better user experiences but have also created a new model for banking.

Will Open Banking lead to c o n s o l i d a t i o n of f i n a n c i a l ser vices due to natural economies of scale from big data and network effects?

The World Retail Banking Report 2019 highlighted that 50 per cent of consumers anticipate using technology giants for financial services by 2022. Consumers are relying on their financial providers to offer products and services that address their needs beyond traditional financial services; greater collaboration with other fintechs could strengthen this connection to the customer. Tech giants have entered the financial services delivery from a number of different starting points. Application- and data-centric firms like Microsoft, Apple and Google are entering into financial cloud computing from a technology and data management perspective. For today’s bank, collaboration is essential to defining a competitive edge. It is

with third-party fintech services in a more open and collaborative model, banks can deliver the best customer experience and maintain a cutting-edge technology service. Again, it will depend entirely on a mind-set shift to embrace openness as an enabler.

We believe that platforms for open innovation like Finastra’s FusionFabric. cloud will be key in enabling the entire ecosystem to collaborate.

What does the move to Open Banking mean for banks in terms of risk assessment and liability?

Open Banking allows validated third parties to access relevant customer data through secure open interfaces. Banks must proactively implement steps to ensure that customers are able to take advantage of new services without their personal data being compromised.

Essential steps that banks and partners can take include encryption, so that data cannot be read if intercepted; proactive threat detection that identifies attempted intrusions; and the adoption of multi-factor authentication at the customer access point. mea-finance.com mea-finance.com

31

COVER INTERVIEW

Heading toward positive outcomes During the unexpected epochal events of 2020, the financial sector was found to be reasonably well prepared with existing digitisation helping to absorb the blows landed

by Covid-19. Nevertheless, outcomes are still underway and Bryan Stirewalt, Chief Executive of the DFSA talks with MEA Finance about the lessons learned and the changes now heading in our direction

By Adrian Murdoch 32

Banking and Finance news in the MEA market

Bryan Stirewalt, Chief Executive, Dubai Financial Services Authority (DFSA)

W

hat are the positive changes that have emerged from the COVID-19 impact in the financial services sector?

It has been fantastic to see the resilience, agility and collaboration demonstrated by the financial services industry in response to the Covid-19 pandemic.

Years of investment in technology and digitalisation paid off this year.

The roles of Big Tech, particularly in cloud solutions, and FinTech in the financial sector are bringing new and unexpected opportunities and challenges to the traditional market participants.

Investment in technology has led the way for seamless service delivery in a remote working environment this has permanently altered the way we do business, work, and from where we work.

How essential is operational resilience in terms of crisis preparation?

Operational resilience is absolutely essential in terms of crisis preparation.

Prior to the Covid-19 pandemic, the DFSA ran regular stress test activities to ensure that systems, programs and teams could function effectively in a remote working environment. We were able to move from to a fully remote working arrangement in a seamless fashion.

During 2020 and continuing on into 2021, our number one priority – and the reason for our resilience – has been our most valuable resource, our people.

As the pandemic started to worsen in March, we focused our immediate attention on the health and safety of our team, implementing remote working and split team protocols to ensure the wellbeing of DFSA staff and their families.

We also fully implemented an Employee

Wellness Programme, which was already in discussion before the pandemic began.

Thanks to the commitment of our staff and the capability of our IT systems, the DFSA has functioned as normal, with little disruption to our everyday activity.

In our discussions with stakeholders over the course of this year, we know that the firms have followed a similar strategy of protecting people first.

The wider DIFC community has also demonstrated remarkable resilience over the past year. Throughout the pandemic, communication has been key. The DFSA

governments around the world mandated social distancing and work from home policies, the financial services sector has demonstrated incredible resilience and agility. They swiftly adapted their services to ensure business continuity by investing in remote capabilities, cloud-based infrastructures and video conferencing.

This shift in resource allocation further stressed the importance of stakeholder partnerships for efficient and effective regulatory oversight.

Enhanced control and supervision of the financial ecosystem are only possible

WE WERE ABLE TO MOVE FROM TO A FULLY REMOTE WORKING ARRANGEMENT IN A SEAMLESS FASHION has been engaging with firms in the Dubai International Financial Centre (DIFC) to ascertain the impact of the COVID19 pandemic on their operations and support them. We held outreach sessions with key stakeholders and reached out to every authorised firm – more than 500 of them – to assess their financial and operational resilience and need for any assistance over the course of the year.

The DFSA believes strongly in fostering the wellbeing of the DIFC, as a community.

How important are stakeholder partnerships in financial services? Will we see more of these this year?

Public-private partnerships will continue to play an important role in the industry as we move into a more digital society.

We have seen that over the last year as

with knowledge and expertise exchange between the two. Similar to the successes of public / private partnerships in fighting financial crime, these partnerships will be critical in dealing with cyber risks issues as well.

The financial services industry saw acceleration in digital adoption last year, how will this continue in the year ahead?

For the past 10 years, since the previous crisis, the financial services industry has been investing significantly in technology.

This has paid off tremendously in terms of financial and operational resilience in dealing with the pandemic. It is quite clear that the future of finance is based on technology. Over the past year, we have seen a clear acceleration to more digitalised platforms for almost every mea-finance.com

33

COVER INTERVIEW

industry. The financial services industry has to adapt to the fact that people want instant access and excellent customer service 24/7, as that is the future of the industry. This will continue in 2021.

With digital acceleration comes cyber threats and attacks, how can the industry stay protected against this?

As financial institutions continue to advance in their digital transformation and increase the sophistication of their cybersecurity, cyber criminals will also increase their efforts and sophistication.

No matter how strong a company’s cyber defences are it will still have

FIRMS MUST REMEMBER THAT CYBER RESILIENCE GOES WELL BEYOND PURCHASING THE RIGHT SOFTWARE AND HARDWARE THROUGH THE IT DEPARTMENT vulnerabilities. Firms must remember that cyber resilience goes well beyond purchasing the right software and hardware through the IT department.

The Human Resources department also plays a significant role in cyber resilience through training, development and awareness. This must also play a larger role in overall governance of every company, not just financial institutions.

Public-private partnerships, particularly with regards to information-sharing are a valuable tool in cyber resilience. The DFSA’s Cyber Threat Intelligence Platform (TIP), the region’s first regulator-hosted threat intelligence platform, was created with this in mind. Cyber insurers are

34

also raising cyber awareness, assisting companies in reviewing their cyber environments, and to reduce control gaps in order to reduce claims costs and cyber insurance premiums.

Over the past year we have seen a rise in the consolidation of financial institutions, are we expected to see more of this in the years ahead?

The last few years have seen greater

Banking and Finance news in the MEA market

consolidation in the banking and investment business sectors in the region.

More mergers are a possibility. Firms may decide that joining with others is the best way to deal with the multiple challenges of the economic consequences of the pandemic, whether this is in terms of tackling the uncertainties around the development of the global economy or addressing cyber risks or the need for increased investment in technology and upskilling.

A full service international law firm built for the Middle East

LEADERS IN BANKING TECHNOLOGY

The next normal: thought leaders’ insights Digitalization is ushering in many opportunities for GCC lenders and industry leaders expect the trend to help financial institutions to expand and diversify revenues and control costs

G

ulf region countries are still reliant on oil, which accounts for more than 50% of fiscal revenues—except for the UAE, where it contributes around 35% of the fiscal budget, according to Deloitte.

The double whammy of the COVID19 pandemic and a plunge in oil price continues to squeeze regional economies.

Growth in banking assets across the GCC is linked to regional GDP, which moves largely in tandem with oil prices.

However, despite these difficulties thought leaders are confronting a wide range of challenges, many ongoing, but also some new obstacles in a bid to improve competitiveness and boost capital amid sluggish growth.

Banking technology Regional banks have been hailed as proinnovation and leading bankers expect them to continue to dominate as the sector goes more digital. Similarly, the banks’ tech-savvy customers and regulatory initiatives such as regulatory sandbox and open banking are also accelerating the banks’ digital transformation efforts.

Raghu Nandakumara, Field CTO at Illumio, highlighted that the demand for

36

Zero Trust-based finance solutions in the Middle East has created a need for simple to implement technology and to meet the demand, Illumio is joining hands with some of the top security solutions providers in the region such as Help AG. Digitalization is ushering in many opportunities for GCC lenders and industry leaders expect the trend to help financial institutions to expand and diversify revenues and control costs.

Islamic financing Green bonds are a growing category of fixed-income securities and thought leaders expect green Sukuk could widen the appeal of Islamic bonds beyond traditional markets to include ethical investors in Western countries.

S&P Global said that growth in the global Islamic finance industry will slow significantly in 2020/21 due to the impact of the pandemic in core Islamic finance economies amid necessary containment measures.

However, these measures have also highlighted the importance of leveraging technology and creating a nimbler Islamic finance industry. Mohammed Kateeb, Path Solutions’ Group Chairman

Banking and Finance news in the MEA market

& CEO, said that as the only software firm certified by the Accounting and Auditing Organization for Islamic Financial Institutions, Path Solutions strives to be unique and innovative to maintain a competitive advantage in this fast-paced, rapidly changing world.

Higher digitalization and fintech collaboration could potentially strengthen the resilience of the sector in a more volatile environment and open new avenues for growth, said S&P Global.

Wealth Management The uncertainty around the trajectory the pandemic is taking and its impact on the banking sector will likely remain for the foreseeable future. However, in the “new normal” new and reenforced client demands and priorities will emerge, with advisory excellence, the availability of hedging strategies, as well as the confidence in the operational resilience of a wealth manager becoming important factors, said Deloitte.

Thomas Schornstein, Head of Middle East Business and Member of the Executive Board of additive, said, “After three years on the technology side and involvement in numerous client projects I have learned one important lesson, there is no ‘one size fits all’ solution. The key success drivers of the actual business model must be analyzed carefully before a digital journey can be defined.”

For wealth managers to enjoy a competitive edge in a ‘new normal’, a more digitally enabled front office will be a key requirement.

LEADERS IN BANKING TECHNOLOGY

An appetite for change Ahmad Dorra, Customer Experience Solutions Sales Lead for the Middle East, Africa & Turkey, discusses how Avaya are helping banks enhance the customer experience while taking them through the inevitable changes brought by digitisation

W

hat excites you and keeps you motivated as a regional leader in banking technology?

Banking is one of the key pillars of the region’s economy. What keeps Avaya motivated as a regional leader in banking technology is our appetite for change and our desire to stay one step ahead with technology that enables regional banks to enhance their digital services – both for customers and employees.

Banks in the Middle East quickly adapted to the COVID-19 pandemic and the resulting shift in customer preferences. They rolled out fully digital branches, virtual banking services, selfservice chat bots and other innovations in their attempt to provide their customers with world-class digital experiences.

The best part is that these responses to an immediate challenge will pay dividends long into the future. Looking to the post-COVID world, Avaya’s recent Life and Work Beyond 2020 report shows that 79% of consumers expect organizations’ contact centers to do everything possible to make them a happy customer. These digital-first investments will make it easier for banks to deliver on that demand.

Describe your journey in banking technology and how this has influenced the role you are i today?

Banking is one of the key segments for Avaya’s business. The top 10 commercial banks in the United States use Avaya

38

solutions, and we have an extremely strong banking business in the GCC, too. With that deep experience, we are in a unique position to now help banks to navigate the uncertain outlook today and enable them to create an opportunity to reconfigure working practices, customer experiences and physical spaces.

Our technology plays a pivotal role, encompassing everything from reviewing channels, digital transformation, ways of working and cloud solutions.

What does your company bring to the banking and financial sector that helps it advance levels of service and remain profitable?

As banks continue to contend with fastmoving trends around customer and employee experience, we are working to support their success. Customer

WE ARE WORKING WITH OUR CUSTOMERS TO IMPROVE THE RANGE OF FUNCTIONALITY AND CUSTOMER SUPPORT ON THEIR APPS

Banking and Finance news in the MEA market

journeys and branches are changing, we are helping to provide new and innovative technology platforms that enable, for example, secure payments through smart authentication for apps and other channels, personalized experiences based on predictive analytics of customer behaviour, and meaningful customer relationships supported by video and voice solutions in bank branches.

In the light of the past turbulent year, what are your plans for 2021?

This year we are focusing on enabling our banking customers to contend with the major trends facing the industry. We recently conducted a research study with banking executives across the Gulf, and through those interviews, identified six key trends where we can add value: B a n k b ra n c h es t ra n sfo r m e d through cashless commerce: The reduced need for branches to handle cash means banks are playing catch up on customers’ payment choices, and we are working with our customers to improve their digital capabilities to fill that gap.

B anking apps as part of the multiexperience: Most mobile banking users need customer support for queries, complicated questions or just reassurance, and that’s where Avaya comes in. We are working with our customers to improve the range of functionality and customer support on their apps.

Ahmad Dorra, Customer Experience Solutions Sales Lead for the Middle East, Africa & Turkey

etter customer insight driving B sales: GCC banks are collecting more and more data as improving customer insight in a time of great change becomes a priority. The analysis of customer feedback and its synchronization with CRM data delivers an effective CX template. We are focused on enabling our banking customers to intelligently use their data and seamlessly integrate it with the customer journey. ybrid working is here to stay: H All the GCC banking executives we interviewed acknowledged that unified communications (UC) is a key contributor to a bank’s success, particularly as it enabled the business continuity at the height of the pandemic.

Post-COVID, even if employees return to an office-based environment, there will still be more virtual calls rather than face-to-face meetings. We are enabling

hybrid working so that bank employees can serve customers and collaborate wherever they are. cloud learning curve, enabled by A banking regulators: Most bankers we have interviewed support cloud migration as it is key for agility, but some are wary of the security risks and required approvals from regulators across GCC countries. Overall, the picture is positive, and we are certainly helping banks use the cloud to increase the scalability in their contact centers. intechs more likely to be partners F than competitors: Because of the banks’ costs of compliance and capital requirements it is advantageous for them to partner with innovative, start-up tech providers for new and exciting services. With our open platforms, we are focused on helping our banking customers to integrate

emerging financial technology into the customer journey.

Do you foresee, through changes in society and advancing technology, the traditional divisions between banking and some other industries disappearing?

The pandemic has encouraged GCC banks to commit to digitization in a way never seen before and to deliver services differently to customers. That definitely puts them on a level of competition, in some areas, with global technology giants. In some cases, the banking executives we interviewed are facing competition from, and are working with, new and global providers offering to modernize and transform banking with complementary services. It is certain, however, that banks have diversified from traditional finance business models, and we expect the industry to continue making inroads into other sectors as the world continues to digitize. mea-finance.com

39

LEADERS IN BANKING TECHNOLOGY

A customer-centric focus Highlighting the region’s “can do” approach to challenge, Pritesh Kotecha, SVP for Europe, Middle East, Africa, Turkey & Israel, describes how his career path in technology fits well with SmartStream’s keen attention to the customer

W

hat excites you and keeps you motivated as a regional leader in banking technology?

The continuous momentum. Every challenge, both professional and personal, is approached with a ‘can do’ attitude and achieved through innovation and a sense of community. People in the region are social and eager to share their experiences and advice. Ideas come to fruition sooner and you can see the tangible results faster. This forward-looking spirit is infectious and drives us all to do better. As a leader this energy motivates me and my team.

I surround myself with people who share the same unrelenting drive to help our customers find new ways to excel. Within SmartStream we believe that “If you do not create the next thing that disrupts your business – someone else will”.

Describe your journey in banking technology and how this has influenced the role you are in today?

I graduated in 1992, in the midst of one of the worst recessions the UK had ever faced. Determined to work, I took the first job I was offered which was in retail electronic sales. Though I didn’t know it at the time this low-level job would be a blessing since it would teach me about people - how to listen, serve and build relationships. My first corporate role was

40

in support on the night shift, and from there I gradually worked my way up and eventually landed in banking technology sales. The UK is a tough, overcrowded and highly competitive market so you have to quickly learn the value of customer service and delivering on your commitments. I was fortunate to be given the chance to build a regional business when the DIFC acquired SmartStream in 2007. The experiences and lessons I had learned throughout my career have served me well. We proudly serve 100+ regional banks and have a stellar reputation for being customer centric in all we do. I personally train & mentor new sales recruits, which allows me to impart some of the things I have learned through my journey.

What does your company bring to the banking and financial sector that helps it advance levels of service and remain profitable?

Our clients’ main objective is to offer their client’s the most immersive and seamless digital experience and to enable that SmartStream takes care of all of the operational aspects that sit behind it. We tell our clients “You take care of the Experience; we’ll take care of the Transactions”. Our end-to-end Transaction Lifecycle Management (TLM ™) suite can be deployed as a single module, across the enterprise or in the cloud as a managed service,

Banking and Finance news in the MEA market

or as a full BPO. TLM lowers our client’s cost to income ratio, reduces their operational risk and provides analytics and insights into all operational aspects.

Additionally, it provides early warnings of transactions and processes that have failed or are about to fail. By SmartStream providing benchmark Service & Operational level outcomes to our clients, this allows them to provide a world class service to their clients.

In the light of the past turbulent year, what are your plans for 2021?

With business teams no longer centrally located we have seen stress points and risk in even the strongest of operations.

These impact the business and client facing functions. The resources that businesses rely on have the knowledge needed by financial institutions but are hindered by traditional technologies limitations which is still IT centric and usually requires lengthy IT projects to implement change. While we often hear about business self-service, it is not yet prevalent across our industry. In 2018 SmartStream founded our Innovations Lab to create and embed Artificial Intelligence (AI) into our TLM solutions.

Three years on these capabilities are providing our clients with real business self-service. For example, raw data can simply be dropped into our TLM Reconciliations solutions and the AI algorithms will immediately understand the formats, decipher the best matches and provide insight – all in seconds – with no IT or application knowledge required. At SmartStream, we understand the value and power of having clean data and a single version of the truth cross all of solutions and services. We pass that value on to our clients so they can accelerate their digital footprint and provide an agile and immersive experience to their clients.

Let’s talk about the next wave in AI, Machine Learning & Managed Services

SmartStream’s fully integrated suite of solutions and platform services for middle- and back-office operations are more relevant than ever – proven to deliver uninterrupted services to critical processes in the most testing conditions. Their use has allowed our customers to gain greater control, reduce costs, mitigate risk and accurately comply with regulation.

With AI and machine learning growing in maturity, these technologies are now being embedded in all of our solutions and can be consumed faster than ever either as managed services or in the cloud.

Simply book a meeting to find out why over 70 of the world’s top 100 banks continue to rely on SmartStream.

info@smartstream-stp.com smartstream-stp.com

LEADERS IN BANKING TECHNOLOGY

Prepared for the Unexpected Raghu Nandakumara, Field CTO at Illumio describes his experience in financial technology which has shown him that security, far from being a hinderance, can be an enabler for business

W

Raghu Nandakumara Field CTO at Illumio

hat excites you and keeps you motivated as a leader in banking technology?

Nothing ever stays the same and especially in the MEA region. If this year has taught us anything it is that we must always try to be prepared for the unexpected. The dynamic nature of the banking industry mixed with the unpredictability of the world makes me feel that I want to get up every morning and make a difference. Who knows what will happen next?

D e s c r i b e yo u r j o u r n ey i n banking technology and how this has influenced the role you are in today?

In my 15 years of experience in the financial services sector, I have had the opportunity to work across a number of areas of Cyber Security – from the early days in operations, through service delivery, engineering, product management, and finally audit and compliance. This variety of roles has helped me understand how technology solutions are assessed, certified, integrated and operationalised and then validated. Further, the opportunity to work closely with the business in a highly regulated industry has allowed

42

me to appreciate how security can be an enabler for, rather than a hindrance to, productivity. My current role of Field CTO at Illumio draws heavily on all these experiences which, in hindsight, have been invaluable.

OUR TECHNOLOGY IS NOT ONLY USED BY SOME OF THE LARGEST BANKS IN THE WORLD BUT ALSO SOME OF THE SMALLEST

What does your company bring to the banking and financial sector that helps it advance levels of service and remain profitable?

For banks of all sizes, Illumio provides a simple security solution to prevent malware from spreading to critical applications within the organisation.

Banking and Finance news in the MEA market

Segmenting environments like PCI and SWIFT from other IT systems not only helps banks remain compliant but can reduce the impact of any breach. By restricting an attack to a small area Illumio can speed up the detection of a breach. Detecting and remediating a breach in a short time can dramatically cut the cost of that breach. The key to the product is how quickly and simply it can be deployed and become effective.

Our technology is not only used by some of the largest banks in the world but also some of the smallest.

In the light of the past turbulent year, what are your plans for 2021?

The last 12 months have brought about a massive change in the way people work and how companies operate. This has driven the need to increase the security and control in the computing environment that Illumio can fulfil. The demand in MEA for Zero Trust based finance solutions has created a need for simple to implement technology. To meet this demand for 2021 we need to build our position in the region. We have already created alliances with some of the top security solutions providers in the region, like Help AG, but you will see investment in many other areas during the year.

Making an impact If all the bank customers relying on Temenos solutions were a nation, it would be the third largest. Jean-Paul Mergeai, Managing Director of Temenos for Middle East & Africa reflects on his journey with the company and where their future is taking them

W

hat excites you and keeps you motivated as a regional leader in banking technology?

This year we are celebrating 25 years of Temenos in MEA. We have a strong presence in the region with seven offices and a highly experienced team, as well as a deep and rapidly growing customer base, from the very largest banks (such as Al Rajhi) to the newest and most ambitious new challenger banks (such as STC Pay).

I am particularly excited by the size of the opportunity with challenger banks and digitization in the region. MEA is a hotbed of banking innovation and there are many great examples of banks, big and small, using technology to make banking better and boosting financial inclusion.

Describe your journey in banking technology and how this has influenced the role you are in today?

I am a technologist at heart, having started my career as an academic specializing in the fields of Machine Translation and Artificial Intelligence. I have worked for over 30 years in IT solutions for banks and financial institutions.

I joined Temenos in 2010 as part of its acquisition of Odyssey Financial

Technologies and have been the Managing Director of Temenos’ MEA operations since 2014. My remit has since expanded to include the APAC region.

What is really exciting is the pace of innovation at Temenos and its scale. It is really rewarding working for a company that can boast to have such a massive

MEA IS A HOTBED OF BANKING INNOVATION impact on people’s lives – we serve 3,000 banks and as a result 1.2billion people worldwide depend on Temenos solutions for their day-to-day banking.

What does your company bring to the banking and financial sector that helps it advance levels of service and remain profitable?

Before Coronavirus, we knew that banks faced big challenges, including intense financial pressure, rising customer expectations and fierce competition.

The pandemic added to this, in particular

Jean-Paul Mergeai, Managing Director, Middle East & Africa

accelerating the customer demand for digital. Individuals and businesses are now less likely to visit branches or use cash and are more willing to bank digitally.

Banks have had to accelerate their digital transformations by years.

To succeed in this new normal any player, whether an incumbent or a nimble new entrant, must have a front office that delivers rich customer experiences and a back office that drives automation and brings products to market fast.

It is a big moment for our industry, and we are in a unique position to support banks adapt, transform and launch new hyper-personalised digital banking products and experiences.

In the light of the past turbulent year, what are your plans for 2021?

Personally, I will be expanding my geographic focus in 2021 as I take on my additional responsibility for the APAC region. We have an enormous customer base in APAC and I am excited to work with the team to support their development and accelerate growth in APAC-MEA, a high-potential territory full of opportunities for Temenos. mea-finance.com

43

LEADERS IN BANKING TECHNOLOGY

Technology drives fundamental shift in client service model Thomas Schornstein, Head of Middle East Business and Member of the Executive Board of additiv, describes his journey in wealth management technology and why now is the perfect time for it to enhance business performance

W

hat excites you and keeps you motivated as a regional leader in banking technology?

After over 20 years in wealth management, it is exciting to be part of this fundamental shift in the client service model in the financial service industry. Although digital readiness from clients is increasing very rapidly and client behavioural patterns from online retail have found their way into the financial service industry, not every digital solution is a success. Traditional values as trust, privacy and service quality still play an important role. My fascination is how to bring these elements - state of art technology and expertise in banking together. For payment services and pure brokerage this has been largely achieved, but there is still the gap when it comes to wealth management. This is an area where I think I could create a lot of value.

Describe your journey in banking technology and how this has influenced the role you are in today?

My roots are in international wealth management for HNWI clients. After three years on the technology side and involvement in numerous client projects I have learned one important lesson, there is no “one size fits all” solution. The key success drivers of the actual business

44

Thomas Schornstein, Head of Middle East Business and Member of the Executive Board, additiv

model must be analysed carefully before a digital journey can be defined. Any digitization project is only as good as its commercial success at the end of the day. If you do not have a viable sourcing channel for new clients today, it is a wrong assumption that a digital journey will solve this problem easily. On the other hand, if you are gifted with high number of existing clients already using some digital services, it is more likely that an additional digital offer will be accepted and will contribute significantly to your income.

What does your company bring to the banking and financial sector that helps it advance levels of service and remain profitable?

At additiv, all our products utilize Digital

Banking and Finance news in the MEA market

Finance Suite (DFS®), which is purely specialized for the digitization of the wealth and investment journey. DFS® is a single platform with the agility to adapt to changing needs and the intelligence to deliver personalization, at scale. It makes an ongoing digital roadmap operable.

Our DFS® platform is an intelligent system, dynamically responding to changes, interacting with clients and internal users according to their individual needs. With DFS®, banks have the intelligence to maximize customer engagement according to the individual business and technology strategies, increasing up-sales and cross-sales opportunities and boosting retention rates.

Our approach also ensures that adapting to future changes is easy and avoids the need for big and costly ‘startfrom-scratch projects’. This frees up a bank’s own internal resources to create unique product offerings. And, because DFS® is available in the cloud or as a hybrid cloud setup through Software-asa-Service (SaaS), banks can also benefit from the cost efficiencies associated with cloud deployment.

In the light of the past turbulent year, what are your plans for 2021?

One of the most important pillars of additiv’s global expansion strategy is the Middle East. We see a unique combination of banks and their clients with readiness for our services; a sign that true digitalization is now essential.

Our products, platform and roadmap enable banks to adapt to this need and beyond.

Our aim is to have at least one system up and running with a sizeable market player in every important country in the Middle East as reference case, as we have within Europe and Asia. To support this, we plan to set up new offices here, on the back of client successes, expanding on our already established DIFC office in Dubai and locations throughout Europe and Asia.

In Our DNA Path Solutions’ Group Chairman & CEO, Mohammed Kateeb, describes his journey as a leader in Islamic finance technology

W

hat excites you and keeps you motivated as a leader in Islamic banking technology?

There are two dimensions to the answer and the answer applies to me as an individual and to Path Solutions as a company. First, it is exciting times to be in the technology field because technology is disrupting everything we experience.

There is not a single profession or industry where technology is not driving its change.

Through intelligent software we are finding new ways to perform things efficiently and more effectively and, in the process, of enhancing people lives.

The second dimension is Islamic finance; we are believers in this segment because in addition to improving people’s lives in general, we may have tremendous impact on the biggest challenges facing humanity such as financial inclusion.

Yes, technology is immersing financial services into our lives seamlessly, but it is also helping us reach the unbanked, which is a must to improve the standards of living of the underprivileged.

Describe your journey in banking technology and how this has influenced the role you are in today?

When you are a computer scientist, normally, you start as a generalist exploring what technology can do. I was a good software engineer, and I was privileged to live through extremely exciting times such as the PC and the 4th Industrial Revolution.

During my career I have built software to different industries such as healthcare,

media, telecommunication and finally finance. I got into banking in 2004, and I was drawn to the segment of Islamic finance because of how underserved it was and the opportunities it offers. I felt that we as a company have a chance to make a difference. I started by focusing on small opportunities to serve the investment and financial institutions, then pushed into retail banking. We focused on the small Islamic banking segment which was growing at a tremendous pace.

Subsequently, the global financial crisis hit, which gave us a completely different perspective on how this segment is actually a better solution compared to the rest of the segments. And finally, the 4th Industrial Revolution technologies such as mobility, and cloud, came to give us the infrastructure to reach the unreached.

All this strengthened our focus on this exciting segment.

What does your company bring to the banking and financial sector that helps it advance levels of service and remain profitable?

Path Solutions is a unique enterprise software house that is laser-focused on a niche segment which has given us a deep understanding of this segment and allowed us to create partnerships most of our competitors would never dream of.

Collaboration is key to unlocking continuous improvement and business elevation in a new financial ecosystem. As an example, we are the only software firm certified by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).

In this fast-paced, rapidly changing world,

Mohammed Kateeb, Group Chairman & CEO, Path Solutions

the most successful and sustainable source of competitive advantage is through uniqueness and innovation, and this is exactly what we have been doing. Lately, many other companies have been trying to mimic Path Solutions but lack the DNA for it. Path Solutions is viewed to be the most important school in Islamic financial technology. Many of our graduates (former employees) are holding strategic positions in almost all our multinational competitors who are trying to get in or compete in this segment, something I am immensely proud of; I do believe that “imitation is the sincerest form of flattery”. But all should realize that it takes more than an employee or two to replicate Path Solutions, because it is built in our DNA. Secondly, our passion for technology is unparalleled. As a Chairman and CEO, I am a software engineer by heart and I still enjoy technology brainstorm sessions and I am deeply involved in many of our important technology decisions. This passion is demanded at all levels of the company and part of Path Solutions’ value system. To summarize, we are passionate about our business and creating great technology solutions to empower it.

In light of the past turbulent year, what are your plans for 2021?

2020 was unprecedented and was devastating in many ways; it taught us great lessons as humans and is in the process of creating our new normal.

One of its important side effects, is the acceleration of the transformation to digital across the world. The pandemic will force changes in the regulations and push our industry forward. Our plan is to be a relevant force in that change. During 2021 we will be busy with many of our clients implementing advanced solutions in which we have been investing for the last ten years and we will continue to do so. mea-finance.com

45

WEALTH MANAGEMENT

Interview with Deutsche Bank’s Loïc Voide, Co-CEO for the Middle East and Africa Loïc Voide, Co-Chief Executive Officer for Deutsche Bank in the Middle East and Africa and Head of the International Private Bank MEA based in Dubai, United Arab Emirates, talks with MEA Finance about their Wealth Management business and the depth of their capabilities in the Middle East and Africa

W

hy have Deutsche b a n k d e c i d e d to have two Co-CEOs for the Middle East and Africa region?

Having two CEOs with corporate and private banking backgrounds emphasises the bank’s commitment to the entire Middle East and Africa region.

It will enable us to make better use of the synergies we have within the bank to enhance our longstanding support for our corporate and private clients especially in such a wide and important region for the bank.

As Head of the International Private Bank, what is your primary focus in the region?

Our focus lies on being the primary

46

partner for entrepreneurs and family offices in the Middle East and Africa region with European connectivity. We are uniquely positioned to meet our clients’ needs for a European-based wealth manager because we have global booking capabilities, we can provide access to a leading corporate bank and we can deliver solutions from a top-tier investment bank with strong foreign exchange and fixedincome capabilities. Further, we offer best-in-class Chief Investment Office (CIO) investment solutions, coupled with the institutional expertise of DWS, and superior lending capabilities on both the corporate and family side. These factors make us a compelling choice for Ultra High Net Worth (UHNW) and HNW sophisticated investors in the MEA region and globally.

Banking and Finance news in the MEA market

Loïc Voide, Co-Chief Executive Officer for Deutsche Bank in the Middle East and Africa and Head of the International Private Bank MEA based in Dubai

And which countries you will focus on from a wealth management perspective in the region?

We will be focusing on our main markets in the region such as Saudi Arabia, the United Arab Emirates, Qatar, Nigeria and Egypt as they are strong growth prospects of ours. Also, we want to get

more traction in Bahrain, Kuwait, Oman and Jordan. Further, we want to leverage the very strong business momentum across our Global South East Asia (GSA) business centres in Singapore, Hong Kong, Dubai, Geneva and London. We will drive the expansion of this unit that has established itself as one of the market leaders in serving Non-Resident Indian (NRI) and other clients from the subcontinent in the region.

W h a t i s yo u r c o m p et i t i ve advantage in terms of servicing wealthy clients?

UHNW individuals and entrepreneurs in the MEA region, including our NRI clients, can benefit from Deutsche Bank Wealth Management’s investment platform and offering that covers the entire range from cash management and traditional portfolio management to complex structuring and alternative asset classes. Moreover, our lending capabilities have proven to satisfy the most complex needs which, when required, benefit from direct access to Deutsche Bank’s Investment Bank.

While focusing on internal innovation by leveraging the wide-ranging technological capabilities within the bank, we also cooperate with external partners to provide our clients with state-of-the-art solutions and services. In April 2020, Deutsche Bank Wealth Management renewed its contract with leading cloud banking provider Avaloq until 2028 for six of its international booking centres; Switzerland, Luxembourg, the UK, Saudi Arabia, Singapore and Hong Kong.

The successful partnership allows us to provide clients with one of the most technically advanced solutions available in the market. Furthermore, in December last year, Deutsche Bank and Google Cloud signed a strategic, multi-year partnership to accelerate the bank’s transition to the cloud and co-innovate new products and services. For clients, the agreement will reshape how products and services are designed and delivered. With faster application development and the use of

advanced artificial intelligence and data analytics tools, the bank will be able to respond more flexibly and accurately to the most pressing challenges, trends and client needs.

functions, or colleagues in the back or middle office. We will continue to work hard as a team to ultimately become the preeminent private bank in the Eurozone and one of the leaders worldwide.

What have been the challenges for you as a bank to reach the position you are in today?

Deutsche Bank has worked on some of the sovereign issues last year across MEA – what are your position here?

After the turmoil of the financial crisis, making clients regain trust in the financial system and its financial institutions was challenging. We have achieved this through being transparent

AFTER THE TURMOIL OF THE FINANCIAL CRISIS, MAKING CLIENTS REGAIN TRUST IN THE FINANCIAL SYSTEM AND ITS FINANCIAL INSTITUTIONS WAS CHALLENGING.

and delivering convincing performance.

Our concentrated focus on clients and their needs showed us what was required in order to prevail. And so, Deutsche Bank invested in automatisation, digitalisation, leaner processes and a global platform that offers the latest research, highquality investment advice, solutions and products, all of which are available in all jurisdictions where we operate, 24/7.

This not only attracted more clients, it also attracted a motivated, talented workforce that understand what this business is all about, be it as relationship managers or investment advisers, specialists in central and support

Deutsche Bank is one of the top-ranked international banks issuing bonds for regional sovereigns and our firm commitment to deliver best-in-class service to our government issuers has won us a number of repeat mandates.

According to Dealogic, Deutsche bank has lead the highest percentage of inaugural international bonds for sovereigns in Africa. Last year, Deutsche Bank led major issuances for Gabon, Qatar, Abu Dhabi and Egypt to name a few and we anticipate a good pipeline for this year as well.

Mentioning Africa, what is Deutsche Bank’s operations and capabilities in Africa?

Since opening a representative office in Cairo in 1959, Deutsche Bank has strongly contributed to financing the development of infrastructure across the African continent. The bank uses its expertise in structuring and arranging financing to help countries access the traditional global capital markets and other alternative pools of liquidity.

Deutsche Bank has well over 200 staff providing banking services to our clients on the African continent. We have teams situated in our branch in Johannesburg, South Africa (1979) and representative offices in Lagos, Nigeria (1978) and Cairo, Egypt. In addition, there are a number of coverage bankers and product specialists based in our regional hub for the Middle East & Africa, Dubai and other global hubs including Frankfurt, London and Geneva (amongst others), that provide banking services to clients and individuals domiciled on the continent. mea-finance.com

47

ADVISORY VIEW

Opportunity knocks George Hojeige, Chief Executive Officer of Virtuzone, talks about how the UAE’s foresight and proactive strategy became the backbone of a resilient economy, positioned for firm recovery

W

hile no one could have foreseen that the world will face an unprecedented pandemic in 2020 – one that nearly halted economies and industries across the globe – the UAE has proven that planning for the future and implementing proactive strategies can help build a resilient economy that can withstand even the most difficult times.

The UAE’s approach to the pandemic has been one of “plan, research and act,” rather than simply following the herd. Since the onset of the pandemic, the UAE government has been launching initiatives aimed at sustaining the economy and the livelihoods of its people.

The Central Bank of the UAE allocated a AED 100 billion Economic Support Scheme for retail and corporate businesses affected by the pandemic.

To date, Dubai has launched an economic stimulus package worth up to AED 7.1 billion, while the Abu Dhabi Executive Council earmarked AED 3 billion for the SME Credit Guarantee Scheme.

Unlike in other parts of the world, these stimulus packages are invested

48

into the economy and businesses, rather than individuals.

The UAE has spent years laying down the foundation and the infrastructure to become the region’s leading economic, financial and tourism hub, and it is now in a great position to reap the rewards of that investment.

UAE economy to continue growing in 2021 and coming years Experts anticipate the UAE’s GDP to grow by 2.6% in 2021 and 3.9% in 2022. Although last year brought many challenges to the country’s business community, it also became a record year for new business licences, mostly in the e-commerce, logistics and consulting sectors.

This trend confirms that positive market sentiment in the region is increasing despite a challenging year, a development coinciding with data from authorities that forecast the UAE’s non-oil GDP to expand by 3.6% this year.

Foreign Direct Investment will increase primarily due to new policies The UAE has been making significant improvements to its corporate climate to

Banking and Finance news in the MEA market

George Hojeige, Chief Executive Officer, Virtuzone

further attract Foreign Direct Investment (FDI). The government has recently amended its Commercial Companies Law to include more business activities that allow 100% foreign ownership in the mainland.

The UAE also stands to benefit from the stabilising geo-political situation in the region. With its normalised relations with Israel following the Abraham Accords, experts estimate that annual UAE-Israel trade will reach USD 4 billion and create approximately 15,000 jobs.

Cooperation bet ween the t wo countries is expected to focus on the following industries: financial investment, technologies, defence, energy, medicine and tourism.

Trade with Qatar has also restarted and is anticipated to bring in regional investment and economic opportunities between the two countries, particularly in retail, logistics and cargo operations.

Previously, UAE-Qatar trade was estimated to be worth USD 3.5 billion.

In addition, low entry barriers for company formation and the ease of business setup will continue to drive FDI into the country.

Real estate sector to sustain recovery and growth The real estate market has stabilised after a large two-year correction. Amid the pandemic, the UAE real estate sector proved its resiliency and Dubai even witnessed an increase in property sales in the latter part of 2020.

More investments are expected to pour into the local real estate industry, as experts predict Qatar, a major natural gas producer, will leverage the UAE’s geostrategic position to access other markets.

Expo 2020 to boost key economic sectors Though it has been rescheduled to open

in October 2021, the much-awaited Expo 2020, combined with the UAE’s open border policy, will stimulate the tourism and hospitality sectors, along with the F&B, retail and real estate markets.

The Dubai Expo was previously estimated to add over AED 120 billion to the UAE economy, augment the national GDP by 1.5 percent and welcome 25 million visitors from all over the world.

Dubai’s role as a business and travel destination hub will be pivotal The illustrious status of Dubai as a world-class business, lifestyle and

Fintech industry to soar in the UAE The fintech sector is ripe for further grow th. As consumer behaviour shifts more to online purchases and e-commerce services, the demand for more innovative and responsive digital payment solutions will surge.

This development has already become evident in recent years. During the first half of 2020, Dubai International Financial Centre welcomed 87 new fintech initiatives, which represents a 75% yearon-year increase. DIFC also registered 310 new financial firms in early 2020, marking a 25% increase from the same period in 2019.

UNLIKE IN OTHER PARTS OF THE WORLD, THESE STIMULUS PACKAGES ARE INVESTED INTO THE ECONOMY AND BUSINESSES, RATHER THAN INDIVIDUALS. travel hub will continue to play a key role in drawing foreign investors and generating economic activity, not just in the emirate but across the entire country.

Following quite a challenging year, experts are still optimistic about the outlook of Dubai’s economic performance, which they estimate to grow by 4% in 2021.

In December, the UAE saw a 3.5% increase in the number of foreign companies operating in the country compared with the previous month. A large number of the companies were based in Dubai, 2,446 of which were foreign businesses while 763 were branches of other Gulf companies.

Aside from these, DIFC has concluded an agreement with Israel’s FinTech Aviv in November to collaborate on knowledge sharing, talent development and mutual expansion.

C o n c l u s i o n : T h e UA E h a s established a robust economic framework that will pivot it towa rd s c e r ta i n e c o n o m i c recovery.

The effects of the pandemic can be seen and felt worldwide. Although the UAE has expectedly been affected like other major economies, the trade and economic groundwork that it has founded over the years will be the driving force that will sustain its economic recovery. mea-finance.com

49

PARTNER CONTENT

Inspiring better banking for the post-pandemic world Sanat Rao, Global Head and Chief Business Officer, Infosys Finacle, sums up the multiple challenges facing banks today and suggests underlining their original purpose as the guide to their future actions

T

he Covid 19 pandemic has made a profound impact on people and industry worldwide. In the case of banks, in addition to managing their own businesses, banks have had to assume a social responsibility to help customers and communities get through the crisis. Be it transmitting massive government relief packages, deferring loan repayments, or encouraging digital consumption, banks have had to rise to the occasion, even while having to manage their own challenges around rising NPAs, shrinking growth rates, and declining valuations.

The pandemic has essentially accelerated the multi-dimensional disruption banks have been facing due to a confluence of several forces. On the economic front, banks have had to operate amidst shrinking GDPs, low to negative interest rate regimes, unemployment, and a slowdown in private investments, among others. On the political front, geopolitics, protectionism, and uncertain global trade dynamics have impacted the trade finance business. On the regulatory front, things haven’t been easier for banks either, with higher capital adequacy norms, new Open Banking regulations (such as PSD2), and a host of other laws covering consumer rights, data privacy, security, anti-money laundering, and terror financing, which

50

Sanat Rao, Global Head and Chief Business Officer, Infosys Finacle

Banking and Finance news in the MEA market

imply massive rise in cost and compliance burdens on banks.

Further, new digital technologies such as Cloud, API, AI, and Blockchain are enabling new competitors to enter with innovative, low-cost, disruptive models to threaten incumbent banks that are still on legacy technology. As a result, banks are facing increased competition, especially from nontraditional players such as challenger banks, Fintechs and technology giants like Apple, Google, Alibaba. From a social perspective, the dynamism of customer expectations, their access to information, and ability to vocalise demand is unprecedented; add to this varying demographic and population shifts across markets, which present challenges and opportunities to banks.

Clearly, things are poised to get more challenging, as the Covid-19 led economic contraction aggravates many of these forces. And, banks have to do a delicate balancing act between customers’ credit needs, employees’ safety concerns, government directives, and societal expectations. At the same time, they are required to keep their costs under control while providing for future investments. In fact, McKinsey1 estimates that the banking industry will lose cumulative revenues worth US$ 1.5 trillion to US$ 4.7 trillion between 2020-24 and may take up to 5 years to recover to pre-pandemic ROE levels.

These conditions are making it exceedingly difficult for bank executives to take decisions with conviction. Leading consulting firms have recommended several frameworks to guide action in these times. But banks will need to consider these frameworks in their unique context before expecting any value from the frameworks. They need to embrace first principles thinking, which helps to break a complex problem into its basic elements to achieve clarity and remain certain, amid all the uncertainty.

Every bank should apply this thinking in

its own context, a context that is defined by its purpose. Revisiting and aligning closely with the organization’s original purpose, thus it would be a more sound way to guide a bank’s decisions.

Interestingly, a recent KPMG CEO survey conducted in the pandemic period supports this view. As per the survey2, 79 percent of CEOs said they felt a stronger emotional connection to their corporate purpose since the crisis began. So, what then, should be a bank’s ideal purpose?

Consider, for a moment, the purpose of three banks from three different regions.

ANZ Bank states, “Our purpose is to shape a world where people and communities thrive.” The NatWest Group states, “Our purpose is to champion the potential of people, families, and businesses.” And Bank of America says, “Our purpose is to help make financial lives better through the power of every connection.”

Clearly, most banks have rather similar purposes across the world, at the core of

• Engage customers and employees constantly, to drive purposeful growth for their customers and themselves • Maximize operational efficiencies, to reduce costs of servicing and be more sustainable • Innovate continuously, to create new value and be competitive • Drive continuous transformation, to stay relevant to evolving dynamics Banks would be best positioned to achieve the above by - leveraging the power of modern technologies to unlock new possibilities and leveraging talented teams and purpose-driven culture to unlock true potential.

The pandemic has no doubt, deepened an array of challenges that banks have been facing prior to the crisis - depressed economics, uncertain geopolitics, tightening regulation, threat from new digital-attacker models, and changing customer expectations. But a black swan

REVISITING AND ALIGNING CLOSELY WITH THE ORGANIZATION’S ORIGINAL PURPOSE WOULD BE A MORE SOUND WAY TO GUIDE A BANK’S DECISIONS

which is a genuine intention to improve the way their customers and communities manage their financial lives. That is, to enable their customers to bank better or to save, pay, borrow, invest, and insure better.

Therefore, as banks revisit or strengthen their purpose to drive balance across stakeholder expectations, there are four evergreen priorities that they would do well to focus on. These are -

Sources: 1. https://www.mckinsey.com/industries/financial-services/our-insights/global-banking-annual-review 2. https://home.kpmg/content/dam/kpmg/xx/pdf/2020/09/kpmg-2020-ceo-outlook.pdf

event of this magnitude also provides opportunities to clear obstacles like normal times cannot. Banks that have a clear focus and strategy built around the above priorities will be better able to manage diverse stakeholders› expectations and will be on the road to recovery and growth, much earlier than others.

In summary, these are difficult times, but by adopting a purpose-driven path to transformation, banks will be able to recover in the short-term, thrive in the long run, and help create value for the communities they serve. mea-finance.com

51

WEALTH MANAGEMENT

UAE foundations, so much more than succession planning Often seen as a vehicle reserved for succession planning, Nina Auchoybur, Managing Director at Ocorian - a global company working in fund administration, capital markets, corporate, private client and fiduciary services - highlights the utility of UAE foundations

F

amilies are increasingly becoming more complex, internationally mobile and aware of the transition of wealth between generations.

Therefore, owing to its flexibility, a UAE foundation provides a dynamic option that can accommodate a family’s evolving priorities.

First introduced in the UAE in 2017, foundations have grown to become an integral part of the UAE’s wealth management offering and there are now more than 170 foundations registered in the UAE. They are present in three of the UAE’s free zones (Dubai International Financial Centre, Abu Dhabi Global Market and Ras Al Khaimah International Corporate Centre).

A UAE foundation’s appeal lies in its flexibility. It is a highly flexible vehicle that can be adapted for a variety of purposes.

It provides both expats and UAE nationals with a local solution to manage their wealth, protect their assets and make succession planning arrangements. You may refer to our article Seven benefits of UAE foundations for more details.

However, a common misconception is that UAE foundations are used solely

52

Nina Auchoybur, Managing Director at Ocorian

Banking and Finance news in the MEA market

for facilitating succession planning, normally entailing a sensitive, almost philosophical, discussion around death and legacy. Their utility actually extends well beyond this.

So, what are the other key use-cases of UAE foundations, apart from facilitating succession planning?

Investment holding UAE foundations are used as costeffective investment holding vehicles, especially where the investors cannot or do not want (for practical and legitimate reasons) to appear as direct shareholders. The purpose of said foundation would be to solely hold the investment, to distribute the proceeds, and to close down at the end of the investment term. The investment can be held via a special purpose vehicle, itself held by the foundation, for more protection.

Charitable endeavours UAE foundations can be set up for the sole benefit of approved charitable causes or charitable organisations. These causes or organisations must be specified in the main foundation document.

A foundation structure provides effective governance and regulatory oversight to facilitate collection or pooling of donations/grants and the prudent deployment of funds.

Philanthropic giving In same line as a charitable cause, a foundation can evolve alongside the founder’s vision and ethical wishes and can be used to support issues close to their heart through regular donations.

Employee share scheme A UAE foundation can be used to hold a proportion of the actual shares of a given company in order to “back” the issuance of the phantom shares within an employment share scheme.

The share scheme will normally give the employee the right to receive a cash payment at a future date, usually linked to an exit or a distribution of the company (the employer), as a beneficiary of the foundation, along with traditional good leaver/bad leaver

provisions. The value of the payment is tied to the value of the company’s shares. However, this right does not give any equity ownership to the employee (i.e. the company does not issue any shares to the employee). The benefit of the employee is secured within the foundation.

Given the current economic conditions, businesses may not be able to afford to pay market salaries to attract and retain top talent. A share scheme is an

WHILE HANDING OVER THE EXECUTIVE POWERS TO PROFESSIONAL LEADERS, THE FAMILY CAN RETAIN CONTROL OVER THE OWNERSHIP THOUGH A PROPERLY CONSTITUTED FOUNDATION

alternative form of compensation for employees, which could assist a company to stand out amongst its peers.

Orphan Structure A foundation, itself an orphan structure with no shareholder, can act as shareholder for a special purpose vehicle set up for a specific transaction such as structured finance or a securitisation. This provides promoters the flexibility of structuring certain transactions, without involving the main income generating businesses and protecting their interest.

Business growth Family-run businesses typically have one family member driving the enterprise from the helm, with a number of other family members also holding important positions and having a say on business operations. In order to take these family enterprises to the next level in terms of growth, it is often necessary to switch from single family member leadership to a more structured, professionalised leadership.

One simple way for the family to hand over management but retain control of their business is through the use of a foundation. Transferring ownership of their business to a foundation and appointing professional managers limits the key people risk brought about by sudden incapacitating illness or death of critical family members. While handing over the executive powers to professional leaders, the family can retain control over the ownership though a properly constituted foundation.

Asset protection A foundation can hold a range of assets in its own name and on behalf of beneficiaries. It can be used for holding structures for underlying businesses and financial investments, and can hold other assets such as property, art and other high value possessions.

Because the foundation’s assets do not belong to the founder, they are not readily accessible to creditors, governments or other family members, provided certain conditions are met.

Notably, UAE foundations are the only asset protection/succession planning structures permitted to own real estate properties in the UAE. Greater flexibility, greater control Be it for succession and legacy planning, as philanthropic entities, or for more specific purposes, Ocorian provide full foundation and administration services to create bespoke solutions to meet their clients’ specific structuring needs, enabling them to pass on the benefits of their assets in full accordance with their wishes. mea-finance.com

53

TRADE FINANCE

Staying the course With a parent being one of Africa’s top banks, The Access Bank UK, is enjoying both positive results and a position where its lending and balance sheet assets are relatively risk free. Jamie Simmonds, Chief Executive Officer and Managing Director at The Access Bank UK Ltd talks to MEA Finance about the progress of the bank and why they are on course to meet their strategic plan

A

s The Access Bank UK enters the third year of its current 5 year strategic plan, tell us more about the bank’s processes, strategies, and systems moving forward? What are your main areas of focus?

There are six core values that underpin everything we do: Excellence, Innovation, Professionalism, Empowered employees and Leadership to deliver our Passion for Customers. Our success is founded on the strong relationships we have developed with our customers, which has helped us to better understand and anticipate their individual needs and, in turn, reduce the operational risk to the Bank. This relationship-based approach contributed to a 20% year-onyear increase in 2019 income and has continued to drive growth in the third year of the bank’s current five-year plan.

One of our core measurements of operational efficiency, our cost income ratio, further improved in 2019, to 32.9% from 37.9% in 2018. Profit before tax increased 30% year on year to reach US $57.2 million in 2019 and our pre-tax return on average shareholder equity grew to 19.8% from 18.3% in 2018.

54

We continue to benefit from the strong support of our parent, which invested a further $30.7 million during the course of 2019, which, combined with a policy of reinvesting profits in the bank, led to a 29% increase in share capital at $327 million.

What do you see as the greatest challenges to the bank’s ability to meet its liabilities as they fall due?

The principal risks that we face include credit risk, documentary risk, anti-money laundering & know your customer (AML/ KYC) risk and liquidity risk. All risks are formally reviewed by the Board Risk and Audit Committee, together with the Board Credit Committee, with appropriate processes put in place to manage and mitigate these risks. The bank has adopted the ‘Three Lines of Defence Risk Management Framework’ that is familiar in the UK’s financial services environment.

We have significantly mitigated any adverse impact from material movements in the value of Sterling by changing our functional currency into US Dollars.

Furthermore, the bank is predominantly focused on trade finance, and our balance sheet assets are primarily short term in duration, with 85% having a maturity date

Banking and Finance news in the MEA market

Jamie Simmonds, Chief Executive Officer and Managing Director at The Access Bank UK Ltd

of one year or less. In addition, the bank’s lending to corporate and retail customers is typically secured.

The bank has flexibility to change its loan book in a relatively short time, both in terms of counterparties, and the underlying goods being financed, and therefore the bank does not consider that it has a significant structural exposure to climate change.

The Access Bank UK in London

Framing these challenges, would you do things differently?

I would not make any significant changes to our approach given our focus on the delivery of relationship management. The key learning as a result of COVID-19 is that you can never be too close to your customers and on occasions need to encourage them to ask for assistance before small issues grow to a bigger concern.

Considering the current micro- and macro-economic conditions, what kind of risks do you anticipate the business to face across the markets in which you are present? Does The Access Bank UK have the adequate financial and capital resources to shield its operations as well as business from the risks to which it is exposed?

In Africa, as elsewhere, the COVID19 outbreak is impacting economic prospects. The African Development Bank estimate is that the continent’s

CHANNEL INNOVATION IS NO LONGER ABOUT BOLTING ON YET ANOTHER TOUCH POINT. GDP could contract by as much as 3.4% in 2020, compared with earlier projected growth of around 4.0% this year.

This will create some challenges in the short-term for Africa’s economy, but the continent still offers an abundance of opportunities for both local and overseas investors focused on the long term. Africa is currently home to 1.3 billion people, and in the next 30 years, its population is projected to almost double. As the number of people living

on the continent increases to two and a half billion by the middle of this century, there will be an increasing demand for new goods and services, energy and infrastructure.

What is your approach on technology for the bank? What digital transformation efforts have The Access Bank UK carried out and where do you plan to go from here?

At the outset the Bank secured a modern technology platform which has been the subject of continuous investment and enhanced to ensure a flexible platform unconstrained by legacy issues. This has proved its worth when we became direct members of the UK Sterling system.

We are confident that this approach will provide a continued competitive advantage and will prove invaluable in the continued development of customer propositions. mea-finance.com

55

OPINION PIECE

Mentorship, a Fast Track for a New Pool of Women in Finance Hanadi Khalife, Senior Director of MEA and India operations at IMA explains that having women occupying senior management positions can have allround positive results for business, and that mentorship is what will help make this a more regular feature of the working landscape

L

inkedIn’s labour market update for July revealed much welcome news this summer. It appears that the women hiring rates that had dipped during the early stages of lockdown had subsequently followed a U-shaped trajectory before making a full recovery in June and July. With the exception of manufacturing, female representation across industries rose during the lockdown and continued to rise in subsequent months. According to Pei Ying Chua, Asia-Pacific lead economist at LinkedIn, “The lockdown,

56

Hanadi Khalife, Senior Director of MEA and India operations at IMA

Banking and Finance news in the MEA market

which promoted acceptance of the work from home concept supported by flexible work hours, has emerged as an opportunity for women to rebuild careers and start afresh.”

The increase in female representation has been notably higher in sectors that already had higher gender parity such as corporate services, education, healthcare, media and communications.

Female representation grew 8 percentage points on average, in contrast with a mere 4 percentage points for industries that started out with lower gender parity such as consumer goods, finance, manufacturing and software.

Prior to the pandemic, the number of women entering the workforce in the Middle East region was steadily increasing. In the region, just five per cent of CEOs of leading companies are female and women in senior management totalled 29 percent in 2019 – a reasonably good representation of what should relatively be much higher.

A 2019 report from Oliver Wyman shows that globally, women hold 20% of positions in executive committees and 23% on boards, but that only 6% of CEOs in financial institutions are women.

However, the Middle East — traditionally one of the most challenging regions for female leaders to scale — bucks the trend with women gradually being assigned to leadership positions within the financial sector in the region. The growing number of influential women in Middle Eastern finance includes those working in banks, investment firms, financial law and consulting companies.

Current challenges of the pandemic aside, it is likely that in some -if not many of these cases- most of these s u c c e s sf u l wo m e n h a ve h a d to battle social prejudices along their career path to the top. As female participation in the sector increases, and as their roles grow in importance, t h e n e e d to m e nto r t h e m a l o n g their journey becomes even more important. Mentorship cannot be piecemeal or sporadic. It needs to be

institutionalized. Programs that enable the growth of women in finance from middle to senior management ought to be in place during what stands to be a critical point in women’s career when they need additional support to make the transition. Men and women industry leaders - specifically those who have been amply supported throughout their own journey - have a significant role to play in increasing mentorship and coaching programs to empower their female colleagues to grow.

While companies need to focus on more affirmative action to ensure

MENTORSHIP CANNOT BE PIECEMEAL OR SPORADIC.

gender equality; whether through quotas or special recruitment programs for women, they also need to pay more attention to how women can be mentored better to keep pace with new and emerging requirements of the industry. Given the changing nature of the finance function – its growing confluence with digital technologies on the one hand and its increased focus on providing operational and strategic guidance on the other - poses functional and work-related challenges to women in the finance function. What the pandemic has shown is that women with digital skills, including those related to disruptive technologies such as artificial intelligence and robotics, have weathered the pandemic better compared to those

with basic digital skills. Such successful outcomes make the case for programs that are structured in a way that allows for women to continually upskill and re-skill themselves.

The increase in numbers of women embracing senior leadership roles in the region is reflective of the ambitions of the Gulf countries that are eager to revitalise their economies and stay a step ahead of shrinking oil revenues.

Though the women who are ambitious, entrepreneurial and confident, represent the minority, their continued success will help to level the playing field and pave the way for more women to embark on career paths that lead to the top.

Increasing opportunities for women to advance to leadership roles in the organization begins with understanding the internal pipeline to identify barriers and obstacles to advancement and in turn establishing measurable goals for building equity. Ultimately, organizations need to develop corporate cultures that support women who wish to achieve a healthy work life balance, rather than breed cultures that penalizes them for attempting to balance priorities. As businesses and the finance function in particular transform, mentorship programs will lead to facilitate better growth, adaptability and innovation in favour of women in the workplace.

And it is much needed – let us not forget that women leaders are not just good for business but also fundamental to building more sustainable, selfsufficient and increasingly shockproof economies. As a study from SMP Global Market Intelligence found - companies with female CFOs and CEOs are more profitable than those led by men.

Women led companies generated $1.8 trillion more in gross profit than the sector average. This is a great incentive to encourage organizations to put forward more structured efforts towards mentoring women and helping them to grow, as a means of achieving sustainable long-term organizational growth and success. mea-finance.com

57

LIFESTYLE

Classic Fusion Takashi Murakami All Black

The art of the horologist

H

UBLOT Founded in Switzerland in 1980, HUBLOT is defined by its innovation, which began with the highly original combination of gold and rubber. This “Art of Fusion” stems from the imagination of its visionary Chairman, Jean-Claude Biver, and has been driven forward by CEO Ricardo Guadalupe since 2012.The release of the iconic, multi-award-winning Big Bang in 2005 paved the way for new flagship collections (Classic Fusion, Spirit of Big Bang), with complications ranging from the simple to the highly sophisticated, establishing the extraordinary DNA of the Swiss watchmaking house and ensuring its impressive growth. Keen to preserve its traditional and cutting-edge expertise, and guided by its philosophy to “Be First, Different and Unique”, the Swiss watchmaker is consistently ahead of the curve, through its innovations in materials (scratch-resistant Magic Gold, ceramics

EXECUTIVE DIRECTOR AND PUBLISHER Kenneth Mitchen ken.mitchen@mea-finance.com COMMERCIAL DIRECTOR Nap Estampador nap.estampador@mea-finance.com Tel : +971 50 100 5488 SALES DIRECTOR Andrew Cover andrew.cover@mea-finance.com Tel: +971 50 931 3236

58

in vibrant colours, sapphire), and the creation of Manufacture movements (Unico, Meca-10, Tourbillon).HUBLOT is fully committed to creating a Haute Horlogerie brand with a visionary future: a future which is fused with the key events of our times (FIFA World CupTM, UEFA Champions LeagueTM, UEFAEUROTM) and the finest ambassadors our era has to offer (Kylian Mbappé, Usain Bolt, Pelé) as well as artists like Shepard “Obey” Fairey, Marc Ferrero, Richard Orlinski and Maxime Plescia-Buchi.Discover the HUBLOT universe at our network of boutiques located in key cities across the globe:Geneva, Paris, London, New York, Hong Kong, Dubai, Tokyo, Singapore, Zurich and at HUBLOT.co Classic Fusion Takashi Murakami All Black is where a watch becomes a work of art The Classic Fusion Takashi Murakami

EVENTS AND MARKETING MANAGER Cris Balatbat crissyb@mea-finance.com Tel: +971 58 594 4818 ADMIN AND FINANCE MANAGER Marilyn Nainque marilyn@mea-finance.com Tel: +971 58 5025836

All Black blurs the lines! For its first c o l l a b o ra t i o n w i t h a J a p a n e s e contemporary artist, Hublot has pushed at the boundaries of creation by developing a new dynamic on the theme of Murakami’s artistic emblem, the smiling flower.

An initial visit to the Hublot manufacture in February 2020 enabled Takashi Murakami to familiarise himself with the work of a watchmaker and timepiece design. This triggered a creative process that resulted in the very innovative Classic Fusion Takashi Murakami, inspired by Murakami’s icon, the smiling flower. Here, it is present both in and on the watch.

Thanks to an ingenious ball-bearing system developed by Hublot’s engineers, its petals start turning. The center of the smiling flower is inserted onto the sapphire glass, creating a unique three-dimensional effect to go along with its wide prominent smile. The Classic Fusion Takashi Murakami All Black takes up one of the most evocative Hublot signatures, the All Black! Invented by Hublot in 2006, it turns out that the “All Black” style is also one of Murakami’s artistic signatures. For an even more pronounced effect, the petals (456 brilliants) and face (107 brilliants) are here set with black diamonds. The watchmakers in Nyon have installed their manufacture Unico calibre in the case with its Classic Fusion emblematic design, a movement offering a 72-hour power reserve. As the first collaboration between Hublot and a Japanese artist, the Classic Fusion Takashi Murakami All Black will quickly become a real collector’s item since it is limited to only 200 models.

FEATURE CONTRIBUTORS: Adrian Murdoch, Mushtak Parker, Walter Sebele editorial@mea-finance.com

WEB ASSISTANT Marie Orayan web@mea-finance.com

Banking and Finance news in the MEA market

Dubai office: #404, Building B, Al Saaha Offices, Old Town Island Burj Khalifa District PO Box 487177, Dubai, UAE Email: info@mea-finance.com

Buy Mutual Funds, track their performance and redeem your investments on the go.

MUTUAL FUNDS JUST WENT MOBILE. UAE

Download the SC Mobile app to invest directly through Online Mutual Funds.

Terms and conditions apply.

sc.com/ae