Author is a Fin-tech entrepreneur having excellent track record of over 20 years of banking and financial industry in U.A.E, Saudi Arabia and India. Wide-range of experience in Corporate & Wholesale Banking, Treasury, Investment Banking, Funds, Corporate, Commercial, Credit, Cash, Trade Finance, & Islamic Operations.
Outclass expertise in Products & Regulatory Controls, Risk Management, in “Business Modeling” focused on bespoke client products along with technology adoption. Proven in-depth understanding of micro/macro financial market econometrics, Offshore, Cross Border Banking and Legal Barriers.
Major Strengths:
• Debt & Asset Management
• Treasury, Investment & Funds
• Credit Management & Product Development
• Structured products and Restructuring
• Hedging and Derivative Markets
• FinTech & Reg Tech Advisory
Expert in Regional/Global Regulatory operational management having exemplary accolades in Islamic Banking with high end achievements in structured products.
Expertise in Global Intelligence, Value Research, Product Development & Processing, projects related to current global disruptive technological changes & its adaptation through FinTech Landscape – micro/macro.
Author is a Fintech Writer, Market Researcher, Speaker & Panelist in various International Banking & Technology Forums: Terrapin, Clear stream/Euroclear, Fleming, BII, Allan Lloyds, Trescon, Alpha-one, PWC, Finastra Universe - Misys-Connect etc.
Current banking world’s massive RegTech and FinTech framework changes outlines a broad range of requirements and expectations that apply to the banking activities including the foremost technological innovation. It is also important to recognize the significant ongoing progress made by the banking sector following the financial crisis 2008 — banks are now safer and sounder, the financial system is more stable and consumers are better protected. Moreover, policymakers and regulators continue to actively monitor developments within the banking sector so that emerging potential risks are appropriately addressed.
To maintain the progress achieved to date, policymakers and regulators need to confirm that key players within the broader financial services ecosystem operate in a safe and sound fashion and comply with consumer protection, AML/KYC and other applicable requirements — particularly if they engage in bank-like activities (e.g., payments, lending). Additionally, as new technologies continue to emerge and mature, further clarifications to the existing regulatory framework may be warranted to enable implementation of more nascent innovations in a timely, safe and efficient manner.
Further, policymakers, regulators and industry should expand their outreach and enhance coordination with one another both domestically and internationally, not only to keep abreast of technological developments, but also to provide industry with a clear
and consistent message concerning requirements and expectations. This will provide industry with the additional clarity and confidence needed to move forward on investments in emerging and potentially much more transformative
and beneficial technologies that are consistent with regulatory objectives.
Technological innovations driving change
UAE and Mideast Banks have to undergo a fundamental transformation resulting from a range of technological innovations globally. Six technologies are currently most prominent in financial innovation: cloud computing, big data and analytics, artificial intelligence (AI)/machine learning (ML), robotic process automation (RPA), distributed ledger technology (DLT) and the Internet of Things. These technologies are at different stages of maturity, and some have the potential to significantly change the industry in the coming years.
Technology-driven innovation is compelling change within the banking industry both internally (i.e., bank-specific) and externally (i.e., industry-specific).
To respond to changing customer expectations and new technological innovations, banks began with a focus on digital experience capabilities, including web, mobile and social. As digital capabilities mature, new technologies emerge and customer expectations continue to evolve, banks are extending their transformation efforts from digitizing narrowly targeted functions to the broader digitization of the enterprise. These changes are resulting in expanded financial inclusion, improved internal operations and transformations to the banking value chain.
Fintech has already found a degree of success in the payments space in the Middle East. The high profile status of Pay Fort (UAE) and other payment FinTech such as Fawry (Egypt) and Madfoo3atCom (Jordan), for example, are signaling growing acceptance of FinTech in the largely traditional Arabic business market.
The UAE, along with New Zealand (14th place with a score of 3.54) and Singapore (6th place with 3.69), were the only three nations classified in this category, given their leading role in driving innovation and building on their existing advantages in efficient and effective ways. Five Arab countries made the top 60, with the UAE leading the pack, followed by Saudi Arabia in 31st place with a score of 2.80, Jordan in 40th with 2.41, Morocco in 50th with 2.12, Egypt in 54th with 1.74, and Algeria in 57th with 1.64.
The potential impact of block chain in the Middle East is being attested to by the global community. Innovative Finance, a global FinTech forum headquartered in the UK, recently set up operations in both Bahrain and the UAE. Furthermore, an Innovate Finance member, Infosys, recently helped to facilitate a sizeable trade finance transaction via block chain with Emirates NBD.
The UAE has come a long way since our leadership first launched the Dubai Plan 2021 and the Dubai Smart City Strategy,” noted Dr Aisha Bint Butti Bin Bishr, Director General of the Smart Dubai Office.
“The strategies, projects and initiatives that have been implemented in the Emirates – and Dubai, in particular – brought together all the necessary ingredients to create the incredible momentum that propelled the country to the high ranks of the World Economic Forum’s classification.”
“New capabilities are emerging on an apparently daily basis, and what is striking about most of these systems is that they could not have been delivered 5 years ago because we did not have the technological wherewithal: the mobile platforms, the bandwidth, the software and more.
“There are 6 billion mobile subscribers around the world, of which 2 billion are smart phone users, and this number is expected to double by 2020. When 3 billion people are connected, they communicate and research very differently; they also socialize, share, build communities, cooperate, crowd-source, compete and trade in ways and on a scale that has no analogous in the analogue world.”
This scenario is unfolding today as financial technology (FinTech) innovators develop platforms that enable consumers to act on the data from multiple financial services companies, all aggregated together—and to move capital easily among institutions without friction or fees.
The Real Challenge
This type of new innovative services could put direct pressure on the operating margins of FinTech incumbent banks. Combined with a regulatory climate that favors financial interoperability, it creates a new competitive threat for financial services companies.
“Banking portability – the ability to retain account numbers even when transferring accounts to new providers—will exacerbate the threat. Fintech banking may not fully emerge this year or forth, but it is a real competitive threat within the banking system, looming during the next five years.”
When consumers can manage a variety of financial products and services from different institutions with one application, it will facilitate the cross-institution movement of money and accounts and will dramatically improve the flexibility of consumers to pick and choose products seamlessly at competing providers. More important, consumers will be able to see and act on their full financial profile at a glance, thereby allowing them to make better-informed decisions.
To compete against this new service model, financial institutions will need to develop more flexible product distribution, enhance partnerships, and deliver compelling digital experiences to sustain the perceived value of consolidated banking relationships. If not, they are likely to see their customers migrate to more inclusive FinTech platforms.
Industry data bears out hypothesis that many bank customers remain loyal at first when it becomes easier to move their activity from one bank to another. For example, in the U.K. in 2013, Bacs Payment Schemes Limited introduced its Current Account Switch Service, enabling consumers, small businesses, and nonprofits to seamlessly close their existing financial services accounts and transfer funds to new ones. Since inception, the service has helped switch 3 million accounts. Although this sounds impressive, it’s too early to say if the switch service is successful. If one assumes, that on average each of the 49.7 million people over the age of 20 in the U.K. holds one checking account, just 2 percent of people in this demographic used the service each year so far.
U.S. consumers have behaved in a similar fashion. A study of activity between 2008 and 2012 suggests only half of consumers who considered switching banks actually did so. Of the consumers expressing concerns about switching accounts, 63 percent cited worries about transferring bill pay or other automatic debits/credits to a different account. This behavior is highly indicative of the stickiness that the banking industry currently enjoys.
Cross-selling remains a high-margin activity for them. Financial services industry statistics suggest that households with 6.6 banking products on average generate twice the revenue of customers with the standard average of 2.7 products. The most prolific customers—those with an average of 16.6 products, which usually include both personal and small business–related accounts—generate nearly 17 times the revenue of a standard two-product customer. The ability to capture more business from existing customers might be the biggest driver of growth and profitability at any given financial institution, and FinTech startups, particularly, could well disrupt this status quo.
If the ability of banks to retain customers effortlessly is compromised, this will naturally add to the pressure for new customer acquisition—which is an expensive activity and an area where innovation at FinTech companies is often superior.
What shall be done?
Higher Management of an incumbent financial services institution can protect highly profitable cross-selling by taking steps to defend a key competitive advantage:
Make use of your considerable customer data assets to create more compelling cross-product interactions than could be achieved in an ecosystem of unaffiliated service providers. More specifically, you can proactively position yourself by taking actions like these:
– Explore new business models with a more fluid customer base and less reliance on deposits and transfer fees for income.
– Recruit new customer groups—for example, international customers and lower-income individuals.
– Take full advantage of the trove of customer data you already hold, using it to design relevant products and services. Banks have significantly more customer data than startups do; take advantage of this competitive edge.
In the end, a deeper understanding of human behavior may save the day for you. Sheena Iyengar, the S.T. Lee Professor of Business at Columbia Business School, is a social psychologist and author of “The Art of Choosing”. Her research has found that too much choice can overwhelm us, leading to unpleasant experiences. Banks may be able to tap into this human response to abundant choice to demonstrate the value of selecting financial products and services from one source.
The observation of key trends — such as the greater availability of data, exponential growth in computing power allowing the analysis of ever larger data sets, broader access to and the decreasing cost of goods and services, increasing disintermediation and re-intermediation, and demographic and generational changes — all point towards a crossroads of significant technology-driven change in the offering of financial services.
Author is a Fin-tech entrepreneur having excellent track record of over 20 years of banking and financial industry in U.A.E, Saudi Arabia and India. Wide-range of experience in Corporate & Wholesale Banking, Treasury, Investment Banking, Funds, Corporate, Commercial, Credit, Cash, Trade Finance, & Islamic Operations.
Outclass expertise in Products & Regulatory Controls, Risk Management, in “Business Modeling” focused on bespoke client products along with technology adoption. Proven in-depth understanding of micro/macro financial market econometrics, Offshore, Cross Border Banking and Legal Barriers.
Major Strengths:
• Debt & Asset Management
• Treasury, Investment & Funds
• Credit Management & Product Development
• Structured products and Restructuring
• Hedging and Derivative Markets
• FinTech & Reg Tech Advisory
Expert in Regional/Global Regulatory operational management having exemplary accolades in Islamic Banking with high end achievements in structured products.
Expertise in Global Intelligence, Value Research, Product Development & Processing, projects related to current global disruptive technological changes & its adaptation through FinTech Landscape – micro/macro.
Author is a Fintech Writer, Market Researcher, Speaker & Panelist in various International Banking & Technology Forums: Terrapin, Clear stream/Euroclear, Fleming, BII, Allan Lloyds, Trescon, Alpha-one, PWC, Finastra Universe - Misys-Connect etc.
What do we mean when we say a financial institution is too big to fail? This term might best be applied to an institution that is so large that its activities make up a significant portion of a country’s payment system, credit-granting process, or other key financial roles. As a result, any substantial disruption in the particular institution’s operations would be likely to have a serious effect on a country’s financial markets, either preventing the markets from operating properly or raising questions about their integrity. The consequence of the “too big to fail” factor is that countries extend protection to large institutions and their customers that is not granted to others. Taking BIS viewpoint, although the new banking and financial conglomerates may pass our traditional statutory and regulatory guidelines, such combinations require that we refocus our attention on a long-standing and vexing concern. To the extent that institutions become too big to fail and are perceived as being protected by implicit guarantees, the consequences may be serious. Moreover, under these circumstances, our current mix of market and regulatory discipline may tend to shift further away from market discipline and, increasingly, toward regulatory discipline, resulting, perhaps, in a less efficient industry.
Overcoming resistance to change
Kurt Lewin has suggested model which encompasses 3 stages:
The first stage is unfreezing the organization’s existing culture by discontinuing current practices, attitudes and behaviors.
The second stage is transition which basically involves teaching the work force new concept.
And the final stage is refreezing the culture by reinforcing new practices, attitudes and behaviors once the change was implemented.
Similarly, there are different approaches to change. Main goal is to maximize shareholder value and asset base, which manages change from the top down and main focus is to build structure and systems. The first plan the capital consolidation and then establish sequential acquisition programs. the motivation in employees shall come through financial incentives and security through major absorptions. Consultants analyze and shape the problem into culture based organizational goals. GE under J. Welsh; IBM under L. Gerstner has adopted these steps during their merger and acquisition. On the other hand, developing organizational capabilities, encourages participation from the bottom up, build up corporate culture employees’ behavior and attitudes. It motivates employee through commitment, and consultants support to management in shaping their own solutions. More examples are Microsoft, Intel, 3 M, Merck, Schwab has adopted this process in many of the acquisitions.
The 3 important assessments and control measure for any fallout in M&A process:
To assess the stress level of bank employees’ (post-merger).
To assess the satisfaction level of bank employees after merger.
To identify the stressors in context with mergers and acquisitions
To manage redundancy and employee absorption to a level of maximum threshold.
The time span required or under any predictable estimation for completion of M&A process, more the delay the more expenses and futile process.
“The rapid rise of new ways of doing business, predominantly through digital channels and unique ways of utilizing labor, is fueling deal making aimed at securing innovation. Banks adapt their strategies and operating models not only protect but take advantage of technology and innovative thinking and will be best placed to seize competitive advantage.”
Technology Capital Confidence Barometer – Drive for Innovation and Growth Sustains Record for Technology in M&A:
With the deal on the table permanently reset, these are the better questions executives needs to target for maximizing their growth strategy in current market trends.
Are you capitalizing on the breadth of deal structures to realize your strategic objectives?
Amid unprecedented change, many banks have to reinvent themselves fast. Beyond traditional M&A, joint ventures, alliances, partnerships and industrial mash-ups are emerging as alternatives to effectively secure deal value.
Are you using analytics and big data to bring greater clarity to increasingly complex deals?
Complexity around the deal table can be simplified through the use of transaction analytics. Companies are looking at an increasing number of targets, often in unfamiliar industries. With multiple stakeholder considerations, ensuring access to the skills to find better answers to complex capital strategy questions is an imperative.
Is an off-the-shelf approach to integration the best recipe for success?
Realizing full transaction value has historically been difficult to achieve. With the pace of deal making intensifying and the realization of back office and customer value enhancement nonnegotiable, a disciplined, C-suite-sponsored integration strategy unique to the deal scenario is crucial.
Are you enhancing or destroying the value of acquired innovation?
The rapid rise of new ways of doing business, predominantly through digital channels and unique ways of utilizing labor, is fueling deal making aimed at securing innovation. Companies that adapt their strategies and operating models not only protect but take advantage of technology and innovative thinking and will be best placed to seize competitive advantage.
Below survey where data taken across the global industry emphasizing on decision makers impact priorities on technological embedded tasks vs. others:
Source: E&Y Survey 2016.
Recent developments causing banks to merge
Throughout the world, banking industries are undergoing a rapid and sometimes startling process of consolidation, spurred occasionally by hostile takeover bids, but, more often, by friendly mergers by institutions that were once fierce competitors. Several reasons that drive banks to merge can be identified:
Firstly, banks are tussling with the same technology, delivery and customer-service issues that have become pressing for major international banks. Banks are feeling forces of globalisation and technological change and must invest huge amounts in their own information technology systems. The electronic revolution also undermines the traditional role of banks as intermediaries between borrowers and savers, in the process reducing banks’ profits. This, in turn, is forcing banks to cut costs more urgently, and a merger with another bank becomes an attractive option for a bank.
Advances in information technology also open up a growing array of delivery channels. Online banking, in all its increasingly varied forms, is poised to become a key channel for transacting banking business. The importance of physical branches in a cyber-world may decline and the nature of the services that branches provide will probably change. Technology is here to stay, and the challenge is for bankers to embrace technology to their own and their customers’ advantage.
Secondly, in Europe, economic, monetary and financial unity has implied increased competition among banks and is forcing them to seek ways to cut costs and to increase market share.
Thirdly, it is believed that the banking and securities industry might in time consolidate into about 15 world mega-firms and that the financial institutions that do not merge soon, increase their size and obtain market share might be left in the cold.
Fourthly, it is believed that banks might become too small to compete effectively, except in niches, either in terms of products or geographically. In several countries, governments and regulators are urging banks to merge not because the merger would make them better, safer or more profitable, but because it would allow them to compete internationally with the main American and European banks counterparts. What governments and regulators should keep in mind is that, very often, the best way to create local banks that can compete internationally is to allow international banks to compete locally.
Fifthly, the choicest merger partners are taken up very rapidly. It is believed that if a bank does not act soon, it might be left with an unattractive merger partner.
Conclusion
The restructuring of the banking industry represents a challenge for bankers and for regulators. Besides the strengthening of supervisory arrangements, it is up to the regulators to support the wave of restructuring by continuing to level the playing-field in the banking industry and by eliminating any competitive distortions. This condition needs to be met for restructuring to have its full effects in terms of economic efficiency and proper resource allocation. Reg-Tech being need of hour to cover many cross-border regulations i.e., ESMA/EMIR, MiFID II, Dodd Frank, IFRS, IAS, BASLE-III, AAOIFI, ISDA, ISA, EMIR, sifma, ICMA, Fed, &Central Banks.
The thrust should be on improving risk management capabilities, corporate governance, technological legacy and room for agility, strategic business planning, competing disruptions, IOT, RPA, Block Chain, smart contracts, and resilient Fin-tech drive. In the short run, attempt options like optimization of resources, outsourcing, strategic alliances, etc. can be considered as first principles. Banks need to take advantage of this fast-changing environment, where product life cycles are short, time to market is critical and first mover advantage could be a decisive factor in deciding who wins in future. Post-M&A, the resulting larger size should not affect agility.
A bigger player can afford to invest in required technology. Consolidation can give the benefit of regional and global opportunities as well in funds’ mobilization, credit disbursal, investments and rendering of financial services, also generate lower intermediation cost and increase reach to untapped segments.
Author is a Fin-tech entrepreneur having excellent track record of over 20 years of banking and financial industry in U.A.E, Saudi Arabia and India. Wide-range of experience in Corporate & Wholesale Banking, Treasury, Investment Banking, Funds, Corporate, Commercial, Credit, Cash, Trade Finance, & Islamic Operations.
Outclass expertise in Products & Regulatory Controls, Risk Management, in “Business Modeling” focused on bespoke client products along with technology adoption. Proven in-depth understanding of micro/macro financial market econometrics, Offshore, Cross Border Banking and Legal Barriers.
Major Strengths:
• Debt & Asset Management
• Treasury, Investment & Funds
• Credit Management & Product Development
• Structured products and Restructuring
• Hedging and Derivative Markets
• FinTech & Reg Tech Advisory
Expert in Regional/Global Regulatory operational management having exemplary accolades in Islamic Banking with high end achievements in structured products.
Expertise in Global Intelligence, Value Research, Product Development & Processing, projects related to current global disruptive technological changes & its adaptation through FinTech Landscape – micro/macro.
Author is a Fintech Writer, Market Researcher, Speaker & Panelist in various International Banking & Technology Forums: Terrapin, Clear stream/Euroclear, Fleming, BII, Allan Lloyds, Trescon, Alpha-one, PWC, Finastra Universe - Misys-Connect etc.
Our Product ‘Double Rental – Equity Release’ not only financially supports property owners and corporates but also boosts different markets within the UAE. The impact of ‘Double rental – Equity release’ on the overall UAE market is analyzed from several perspectives:
Real Estate Market
Increased Demand: This product can potentially increase demand for properties, as it allows older homeowners to access funds without selling their homes. This could lead to a higher level of demand in certain regions, particularly in areas with a higher concentration of retirees.
Supply and Downsizing: On the other hand, some individuals might choose to downsize their homes after accessing equity release, which could increase the supply of smaller properties in the market.
Economic Impact
Increased Consumer Spending: This product can provide older homeowners with additional funds to supplement their retirement income. This increased spending can have a positive impact on the economy, as it boosts consumer spending and supports various industries.
Reduced Inheritance: By using equity release, homeowners essentially decrease the value of their estate, which may lead to reduced inheritance for their beneficiaries. This could potentially impact wealth transfer and future spending patterns of beneficiaries.
Financial Services Industry
Growth of Equity Release Providers: As equity release is becoming more popular, there might be a rise in specialized financial institutions or lenders offering these products. This growth could increase competition within the financial services sector and create new business opportunities.
Government and Regulation
Social and Welfare Implications: The increasing use of equity release may have implications for government welfare programs and social care, as individuals may have more financial resources available to them during retirement.
Regulatory Considerations: Governments may need to monitor and regulate the equity release market to protect consumers from potential risks and ensure transparency and fairness in the industry.
It’s essential to note that the impact of our product ‘double rental – equity release’ on the overall market can vary depending on the prevalence and popularity of these schemes, economic conditions, and the demographic characteristics of the population. While this product can offer financial flexibility to some homeowners, it is crucial for individuals considering such schemes to seek professional financial advice and carefully evaluate the potential long-term consequences for themselves and their beneficiaries which will be evaluated by the finance professionals within Money Protects.
Author is a Fin-tech entrepreneur having excellent track record of over 20 years of banking and financial industry in U.A.E, Saudi Arabia and India. Wide-range of experience in Corporate & Wholesale Banking, Treasury, Investment Banking, Funds, Corporate, Commercial, Credit, Cash, Trade Finance, & Islamic Operations.
Outclass expertise in Products & Regulatory Controls, Risk Management, in “Business Modeling” focused on bespoke client products along with technology adoption. Proven in-depth understanding of micro/macro financial market econometrics, Offshore, Cross Border Banking and Legal Barriers.
Major Strengths:
• Debt & Asset Management
• Treasury, Investment & Funds
• Credit Management & Product Development
• Structured products and Restructuring
• Hedging and Derivative Markets
• FinTech & Reg Tech Advisory
Expert in Regional/Global Regulatory operational management having exemplary accolades in Islamic Banking with high end achievements in structured products.
Expertise in Global Intelligence, Value Research, Product Development & Processing, projects related to current global disruptive technological changes & its adaptation through FinTech Landscape – micro/macro.
Author is a Fintech Writer, Market Researcher, Speaker & Panelist in various International Banking & Technology Forums: Terrapin, Clear stream/Euroclear, Fleming, BII, Allan Lloyds, Trescon, Alpha-one, PWC, Finastra Universe - Misys-Connect etc.
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