|14 April, 2019

Managing dramatic changes in GCC banking and finance industry

Banking and finance CEOs are steering the industry into a new era

A security guard stands near ATM machines at Dubai Islamic Bank (DIB) in Dubai May 1, 2013. Image for illustrative purposes.

A security guard stands near ATM machines at Dubai Islamic Bank (DIB) in Dubai May 1, 2013. Image for illustrative purposes.

REUTERS/Ahmed Jadallah

The banking and finance industry is undergoing a major transformation in many parts of the globe, with institutions coming out with a wide range of state-of-the-art services for customers - both corporate and retail - who are demanding top-of-the-line products.

CEOs leading these financial institutions face a lot of challenges as they have to adapt to rapidly changing technologies, meet the growing demands of customers and also stand up to cyber-criminals who try to attack the systems continually. And they are doing it rather well, steering the industry into a new era.

The markets are pushing banks and finance institutions to continue churning out innovative products and services, which can be delivered to customers in the quickest possible time.

But at the same time, banks and finance institutions have to be extremely careful that their systems are not open for hackers and crooks, who work furiously to steal data and information related to customers.

Banks and finance institutions are among the most heavily targeted by cybercriminals around the globe, and CEOs have to closely monitor the new investments needed to keep out such hackers.

Given these dramatic changes, there is a growing need for CEOs to keep abreast of the new developments globally and also cater to the local consumer needs. They also have to remain alert for fraudsters who deploy the latest in technology to try to swindle banks and finance institutions and their customers.

Unprecedented transformation

AbdulAziz Al Ghurair, Chairman of UAE Banks Federation, noted recently that the UAE banking sector was undergoing an unprecedented period of transformation, with a number of dynamic market forces propelling the industry forward.

"It has never been more important for us to come together to identify opportunities and overcome challenges to further enhance the banking environment and contribute to the country's economic development," he told the first meeting in 2019 of the CEOs Advisory Council of the UAE Banks Federation. "With UAE banks operating with high capital, the outlook for the sector remains positive, and we are confident that it is well-positioned for future growth over the coming year."

Al Ghurair also pointed out that cybersecurity concerns have increased for banks and their customers in recent years, primarily due to the widespread adoption of digital technology across the financial services sector.

The meeting called for banks to drive awareness around the threat of cyber-attacks through further education and training for employees and customers, to build on the current efforts of UBF and its members to tackle cybercrime.

"While exploring our priorities for 2019, we analysed banking, financial, and regulatory developments in the country and formulated initiatives accordingly," said Al Ghurair. "Due to the increasingly sophisticated attacks targeting the financial services sector, we want to embed a culture of cybersecurity awareness and enforcement across the country. Human error is still a major vulnerability in cybersecurity, so equipping employees and customers with the knowledge and skills they need to protect themselves from attacks is crucial."

Established in 1982, the UAE Banks Federation is a professional representative body comprising 52-member banks operating in the UAE. The Federation advocates all banks' interests and enhances cooperation and coordination among them, to promote and upgrade the UAE's banking industry for the benefit of the banking sector, its customers, and the national economy.

CEOs of banks and finance institutions in the UAE are also keenly aware of the need to boost the positioning of the country as a 'smart' one, which deploys the latest in technology.

Utilising cutting-edge technologies

According to Dr. Bernd van Linder, CEO, Commercial Bank of Dubai (CBD), the bank's solutions utilise cutting-edge technologies to enable clients to streamline operations to improve their operational efficiency. "This will not only make our government clients more efficient and effective, but it also helps position the UAE at the forefront of digital innovation," he adds.

Banks are also increasingly shifting over to the electronic channels. Ahmad M. Abu Eideh, who took over recently as CEO, Head Office, United Arab Bank, points out that the bank is focused on deepening existing relationships, adding new ones and introducing an array of new products.

"We are looking at every single offering we have and are looking to improve and add more," he says. "There are specific products we plan to add for retail clients and corporate clients, while widening the general assortment of product offering to other business functions."

Leading financial institutions are also keen on creating the culture of savings among the people, and their CEOs are leading the drive. Mohammed Qasim Al Ali, Chief Executive Officer at National Bonds, says that it is a gigantic task and not an easy one. "We are changing a culture; we are trying to change the behavioural DNA of people where we transform spenders into savers," he adds.

National Bonds, a low- to mid-risk fund, has a tie-up with the Dubai Financial Market to implement a framework to strengthen the emirate's position as a global hub of Islamic economy. A recent report by international consultancy Deloitte on the prospects for the global banking industry in 2019, noted that there may be no better time than now to reimagine transformation.

Strong economic fundamentals

"Economic fundamentals are stronger than at any time in the last decade," said the report. "The regulatory climate is not going to get any more challenging. And, technologies to enable transformation are not only getting more powerful but also more readily accessible, easily implementable, and economical than before. Indeed, there appears to be a new kind of promise in the banking industry."

CEOs in the banking industry in the UAE closely monitor developments around the globe to ensure that the sector here remains stable and not susceptible to the volatilities that hamper the norms in many western nations.

And developments within the UAE are also transforming the banking sector. The Emirates Digital Wallet project initiated by the UBF and joined by 16 top UAE banks is progressing rapidly.

It ensures financial inclusion by providing an instant account opening ecosystem to all UAE residents, allowing them to carry out payments and transfers through their mobile devices.

It will also eliminate half of the Dh68 billion cash circulated in the economy over the next five years, said Al Ghurair recently. The Emirates Digital Wallet will also provide a cost-effective and seamless payment ecosystem for small and medium businesses through a nationwide QR Code acceptance scheme.

For the CEOs of banks in the UAE, managing the dramatic changes that are occurring in the sector also provides an opportunity to help the industry leapfrog into a new era.

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