Abdulla Al Tuwaijiri, Zubair Ahmed, Pinaki Aich, VP of group strategy at the DIFC; David Martinez de Lecea, specialist consultant at Fintech, Roland Berger; and Abdul Haseeb Basit during a panel session.
Cooperation, not competition, will drive FinTech growth in the traditional and Islamic sectors, according to industry specialists at the Global Islamic Economy Summit in Dubai on Wednesday.
They said that fears of an imminent disruption to traditional banking from the financial technology sector are overblown, with a collaborative approach being the most likely way forward.
Speaking at a session titled 'The Tesla of finance is coming: are Islamic banks ready for the imminent FinTech disruption?', panelists from the Islamic finance sector agreed that FinTech companies may herald significant changes, but are being held back by trust issues and regulatory burdens.
Zubair Ahmed, head of IT & Business Innovation at Emirates Islamic Bank, said: "The good things about FinTech companies is speed and customer focus, yet the cons are they are not widely regulated. Increasingly, the relationship between banks and FinTech is being seen as a much more complementary and collaborative one than competitive."
Ahmed explained that opportunities exist for FinTech in truly innovative technologies, such as digital currencies and 'blockchain'. "The FinTech revolution cannot be done by a single bank, but a single bank can create a new norm," he said. "The good thing is that here in the UAE, we have a great body of federation banks which gives input to UAE Central Bank and has such discussions. Dubai government's vision of using blockchain I think will really help the eco-system and the third-parties.
Abdul Haseeb Basit, CFO of the UK's Innovate Finance, agreed that a collaborative approach is most likely, and also identified red tape as a major obstacle for new entrants. "The challenge for startups is regulation. FinTech realises that regulation is where banks have an advantage, while they also have the ability to access a wide customer base. Banks already have that scale so it makes sense for FinTechs to partner with them rather than market on their own."
He also agreed that Dubai's focus on 'blockchain' would be a game-changer for the industry. "Dubai's government aspirations to be a blockchain government is huge. Having a system where you can track and log all transactions is a great step forward. In most cases using applications which already exist actually makes financial transactions and processes cheaper and faster."
Basit said that investors looking for the next big thing should set their sights on one sector: "Remittances. I think is where we could see the next unicorns in FinTech," he said. "Companies who specialise in this can come here and capture market share."
Abdulla Al Najran, deputy CEO of Boubyan Bank, Kuwait, said: "Banks must work with FinTechs as they have ideas that the older generation will not come up with. We are also working with the regulator and bringing new ideas to the table. We discuss ideas and bring them to the market. Non-traditional customers are choosing to go with Shariah compliant products and Islamic banks because of the transparency and now the technology. Technology and FinTech can help Islamic banks broaden their customer base."
David Martinez de Lecea, specialist consultant, FinTech, at Roland Berger in the UAE, said: "Regulation is the biggest challenge. We have an invested in products that are better than others but it takes 6-8 months to roll them out. We are developing great solutions for customers that lower cost and improve access but the regulatory side is still looking at models that were developed two years ago. This process needs to move faster."
He agreed that Dubai was successfully positioning itself at the nexus of finance & technology. "The most groundbreaking things we are going to see in next years are artificial technology, future accelerators and initiatives launched in Dubai - very exciting things are happening here and it's going to become the next global capital of the Islamic world."