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A recent survey by EY found that participants felt that leadership teams in the GCC banking sector generally support digital transformation innovation. Around 70 per cent said the GCC banking sector is open to integrating FinTech innovations to help enhance consumer experience and streamline their operations; while more than 60 per cent of the participants thought that FinTech innovations could help them enhance consumer-centricity and reduce costs.
The results of the survey are not surprising given the high mobile penetration in the region and a tech-savvy young population that prefers to conduct their financial transactions online or over their mobile devices.
"The pace of FinTech innovation in the GCC has been extremely rapid over the past few years, but still requires more work on ground to truly revolutionise the banking industry. The variety of ways in which FinTech innovations are being adopted by the banking sector is increasing and we may even see banks collaborating to build 'shared-cost FinTech solutions' in the future," said Gordon Bennie, Mena Financial Services Leader at EY.
In addition, EY also found that two-thirds of the survey respondents said the GCC banking sector is highly likely to collaborate with or invest in FinTech companies to meet consumers' needs. However, 79 per cent of the survey participants seemed to be in doubt if FinTech players could cause any noticeable disruption in the GCC banking sector in the next one to two years.
"The drive towards incorporating FinTech into everyday banking is promising, but there is still work to be done in generating more awareness around FinTech innovations and implementation. This is not surprising given that FinTech is a rather recent phenomenon," said Ashar Nazim, partner for Global Islamic Banking Centre at EY.
Sudhesh Giriyan, COO of Xpress Money, also believes that FinTech has the potential to alter financial services in the GCC by 2020. The FinTech evolution in the GCC is being driven by two factors: namely, larger conventional institutions are creating digital channels to safeguard against potential disruption; while nimble start-ups are helping deliver online and mobile services for remittances, insurance, investment advisory and online trading.
Larger institutions sometimes struggle with a rapid-response, digital-first culture that is required for FinTech innovation; and smaller players, on the other hand, struggle with the resources, size and the scale required to compete meaningfully. Start-ups also lack the networks and regulatory relationships to gain the necessary permissions.
Giriyan believes that these challenges would spark a series of collaborations between FinTech start-ups and conventional money transfer houses and banks in the short to medium term.
"I believe we're going to see a collaborative model where the transaction might start within an innovative FinTech app, for example, but will then be processed by an existing bank or money transfer house. The money transfer house can handle disbursement through its existing network. This will help skirt regulatory issues and give FinTech players the reach they need to make a difference," Giriyan explained.
- rohma@khaleejtimes.com
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