Dubai International Financial Centre (DIFC), the leading international financial hub in the Middle East, Africa and South Asia (MEASA) region, hosted the second Dubai FinTech Summit (DFS) Dialogues this week, powered by the Innovation Hub.
Heads of 10 leading regional banks and FinTechs were invited to unpack the challenges facing the financial sector and deliberate on how the industry can de-risk and build resilient, sustainable financial institutions.
According to recent research by Report Ocean, the global FinTech Lending Market was valued at approximately USD573.05 bn in 2021 and is anticipated to grow with a healthy growth rate of more than 27.4% over the forecast period 2022-2029.
Hosting the roundtable, Mohammad AlBlooshi, Head of DIFC Innovation Hub and FinTech Hive, said, “As an industry predicated on confidence and trust, we are currently seeing the banking sector experience a time of disruption. Given global headwinds, we have an opportunity to build more resilient institutions through collaboration between banks and FinTechs.”
Commenting on the session he added, “Through conveners such as this roundtable and the first-ever Dubai FinTech Summit in May, we are facilitating dialogue and avenues of collaboration for long-standing financial institutions, regulators, and promising entrepreneurs to together map out how the sector can – and should – move forward.”
The age of Banks vs. FinTechs is behind us
The FinTech sector, widely recognized as a major competitor to banks, is expected to double in size from USD135.9 bn in 2021 to USD266.9 bn in 2027, according to DIFC FinTech Hive’s 2022 FinTech Report. Additionally, with approximately 50 per cent of the MENA region currently unbanked or underbanked, FinTechs have been playing a crucial role in promoting inclusive economic growth in the region.
However, a unanimous takeaway from all banks at the DFS Dialogue captured how both entities are in fact symbiotic. Sanjay Sethi, Senior Managing Director, Head of Global Transaction Banking at First Abu Dhabi Bank, said, “This is an age of collaboration and co-creation where leading financial institutions and pioneering FinTechs can embark on a journey of innovative discovery together. This is especially true when we look at opportunities to expand into new geographies, improve product capabilities, grow revenues, or scale or optimize our business faster and more efficiently. Alongside this, FinTech solutions in transaction banking are growing in agility every day. As we look to the future, FAB will continue collaborating with pioneering FinTechs to deliver impactful advances across the financial industry.”
Earlier this year, the UAE Central Bank announced the implementation of its Digital Dirham digital currency strategy, which promises to be a critical step in the country’s payments industry, something that will deeply impact banks, FinTechs, businesses, and customers. “As such, the synergy between banks and FinTechs proves to be unavoidable as the industry inches towards a cashless economy,” added AlBlooshi.
Technology: Disrupting and enhancing trust
“As a FinTech services provider, the core, as with any tech player is to build an emotional connection with the end consumer,” said Raman Thiagarajan, CEO and Founder, Zenda.
As customers turn to technology, banks have been forced to adapt traditional trust-building to complement the digitisation of banking. Anand Krishnan, Head of Technology, Emirates Investment Bank, said, “It is increasingly important banks continue to invest more in technology that not only builds but maintains trust in customers across their entire journey.”
Google predicts that the financial services and banking industry will emerge as the primary spender for AI technology in the MENA. The industry will make up nearly 25 per cent of all AI investments in the region, with banking tech alone expected to contribute 13.6 per cent to the region’s gross domestic product by 2030.
Mehdi Tazi, Chief Operating Officer, Lean Technologies, stated, “I believe customers still trust banks more than FinTechs – they are larger more established institutions. However, something FinTechs do very well is streamlining processes when helping onboard customers into these larger banks. As a result, we are seeing a marriage between FinTech and banking that enhances the customer’s journey, ultimately building trust.”
The onset of Web 3.0 ushers in a transformative moment for financial services, capital markets and banking, shifting customer expectations and revolutionising the sector. The total transaction value of embedded finance is said to reach USD7 tn in 2026, as per Rakesh Reddy, CEO, Cloud4u, “This is particularly useful for Platform as a Service (PaaS) providers who will strongly benefit from this growth, undeniably becoming a key industry disruptor.”
Nilay Singh, Chief Executive Officer, State Bank of India, DIFC, pointed out, “We cannot ignore AI. It has to be adopted but cleverly and effectively, and this is where we need to understand what to outsource and when to collaborate.”
Dubai is gearing up for continued growth and innovation, so how can policymakers, entrepreneurs and investors come together to further advance during these volatile times?
With a unified goal to enhance inclusive, stable banking solutions for the region, traditional financial establishments are increasingly optimistic in growing their partnerships with promising FinTechs to help bridge gaps and strategically stay ahead of the curve.
Join the dialogue at the Dubai FinTech Summit at Madinat Jumeirah in Dubai. Visitors can now purchase tickets with early bird prices available until 15 April 2023.