Bank ABC’s Deputy Group CEO, Sael Al Waary’s vision for the future of banking

At the 3rd Middle East & Africa FinTech Forum:

Bank ABC Deputy Group CEO outlines vision for the

future of banking in light of fintech disruption

Positive disruption must be embraced through imagination, innovation, integration and inclusion

Sael Al Waary, Chairman of Arab Financial Services (AFS) and Deputy Group CEO of Bank ABC, today told an audience of banking executives and financial regulators that the pace of change in financial services is increasing rapid and called on them to be prepared for the future.

He was speaking as part of the 3rd Middle East and Africa FinTech Forum, which was held in Bahrain on Thursday under the patronage of the Central Bank of Bahrain and attended by a number of central bank governors from a number of Arab countries.

He started his speech by relating the story of the Ideal X, which was the world’s first cargo ship. This was, he said, an apt metaphor for the potential of FinTech to change the lives of people around the world. Containerised shipping, he noted, had completely disrupted global trade when it first appeared. FinTech had the potential to do the same for financial services, and he suggested this would be a positive change as long as a few conditions are met.

Positive disruption, in his view, would involve changing people’s habits for the better, reinventing how people use services, giving customers control of their banking experience, lowering costs for customers, and increasing access amongst a wider portion of the population.

Mr. Al Waary went on to say that the potential impact of financial technology (“FinTech”) can be summarised in four key areas: innovation, integration, inclusion, and imagination.

Speaking of “imagination”, he pointed to ‘smart city’ ideas, which use technology to improve daily life in often-invisible ways. It is possible, he suggested, that in the future banking would be similarly powered by invisible technology; both a constant part of people’s lives and something that is largely unseen.

On “innovation”, Mr. Al Waary noted the significance of current debates relating to artificial intelligence and its future effect on labour markets in financial services. Referencing Hanson Robotics’ creation Sophia, a robot powered by AI that had introduced him to the stage, he spoke of the need to harness the power of AI for the future.

Referencing the concept of “integration”, he spoke of the potential for open banking to dramatically change how customers engage with their finances. Al Waary called on banks to open up their software infrastructure to open banking, and praised regulators who have supported open banking.

On “inclusion”, he highlighted the progress that has been made in recent years to extend the benefits of formal financial services to the many millions of people around the world who don’t have access to banking.

Looking back to 2018, Al Waary noted that several of these areas had seen significant developments. New regulations in Europe and elsewhere had spurred a huge growth in the number of software interfaces (APIs) for open banking, he said. Citing research, he claimed that the number of APIs had expanded by a factor of ten over the last 12 months.

As an example of best practice, he cited the Central Bank of Bahrain, which has introduced significant regulatory changes in the last year that mandate adoption of open banking by the Kingdom’s financial institutions.

Mr. Al Waary pointed out that banks were building new partnerships with FinTech developers, and this was enabling faster, frictionless engagement between customers and financial institutions. He noted that these developments would be of particular significance in the MENA region, where SMEs generate a huge amount of growth but are traditionally underserved by banks. Annual cashless payment volumes are also growing, he stated, and were expected to rise from just over $535 billion in 2017 to over $5 trillion by 2025. The huge growth in e-wallets and other mobile payments products were driving most of this increase, he said.

Total investments in FinTech during the first six months of 2018 were over $57 billion, he observed, dwarfing totals from previous years. He predicted that the interest in FinTech from banks and investors would only continue to grow during 2019 and beyond.

Looking ahead to 2019, Mr. Al Waary made a number of predictions. Noting that much of the discourse related to the impact of FinTech had historically focused on retail banking, he predicted major growth in FinTech applications in the corporate banking space. The increasing cost of legacy systems and greater demands from corporate customers would likely ensure that banks prioritise greater technological advancement in the near future, he suggested.

He also outlined the philosophy of the Bank ABC management, which prioritises digitisation and cloud infrastructure as a means of ‘future-proofing’ the bank and its various brands. He said having forms of secure digital ID, such as biometrics on mobile devices, could dramatically increase access to financial services by eliminating the need for people to use government-issued ID or other forms of identification.

In addition, Mr. Al Waary predicted that traditional banks would continue to lose market share to challenger banks and mobile wallet products, pointing to the newcomers’ more innovative approach to customer experience as the main driving factor.

Citing the example of banks that use AI to review contracts, and in so doing save thousands of hours of work, Mr. Al Waary predicted that AI would take an ever more prominent role in how banks service their customers and also in how they operate internally. “Today’s innovation is tomorrow’s tradition,” he concluded.